ING Group likely to unload more assets

ING Group has reported another massive quarterly loss, raising the prospect of further sales of assets which might include part or all of its ING Direct banking operation.

AMSTERDAM — ING Group has reported another massive quarterly loss, raising the prospect of further sales of assets which might include part or all of its ING Direct banking operation.

The Dutch insurer and financial services provider said Wednesday it lost 793 million euros in the first quarter, equivalent to almost US$1.1 billion.

It cited falling asset prices, shaky insurance contracts and heavy restructuring charges.

The first-quarter setback followed a fourth-quarter loss of 3.1 billion euros, and it was down from a profit of 1.54 billion euros in the first quarter of last year.

The latest results included 1.7 billion euros worth of “negative impacts stemming from the market turmoil,” ING stated.

“Market conditions remained challenging in the first quarter as equity markets declined further, credit spreads remained elevated, real estate prices continued to fall and loan losses increased as the crisis spread from the financial markets to the real economy,” said chief executive Jan Hommen, who took the job after his predecessor resigned in January.

“In this environment, our first priorities are to reduce costs, risk and leverage to strengthen the group,” Hommen stated.

“At the same time, we are working to reduce complexity by focusing on fewer businesses and markets.”

He didn’t provide any forecast, as “markets are volatile and the economic environment continues to be uncertain.”

ING shares fell nine per cent on the New York Stock Exchange.

The group’s insurance business lost 979 million euros, afflicted by bad investments and a 550-million writedown of insurance contracts.

The banking division had a pretax profit of 700 million euros. But banking provisions for bad loans rose to 772 million euros.

The first quarter also took a 329-million-euro hit from restructuring costs.

ING announced 7,000 job cuts in January, five per cent of its global workforce, and said Wednesday that 5,380 have been eliminated so far.

In February, it raised C$2.2 billion by unloading its 70 per cent interest in its Canadian insurance operation, ING Canada, now renamed Intact Financial Corp. ING still owns all of ING Direct, a branchless bank which likely could be sold quickly to raise more cash.

“I think it would be quite attractive,” said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier in Toronto.

Unlike ING Canada, which was sold widely to institutional buyers and the public, ING Direct would probably go as a unit to another financial institution that wants to raise deposits, Nakamoto suggested.

“The ones that come to mind are maybe like an insurance company — Manulife, or Sun Life, or Great-West Life, guys like Power Financial.”

Nakamoto noted that ING Direct also operates in the United States and other parts of the world, and might be sold as an international unit to a global player — although many other big global financial players are in similar straits.

— With files from The Associated Press

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