ING Groep N.V. (ADR) (NYSE:ING) announced last night that it plans to sell its 9 percent stake (54 m shares) in Capital One Financial Corp. (NYSE:COF), through placing. ING acquired the stake this year, through the sale of its online bank. Based on yesterday’s closing price, the stake is valued at $3.05bn, or €2.4bn
In a statement by Virginia-based Capital One, Bank of America Corp (NYSE:BAC), Morgan Stanley (NYSE:MS), and Citigroup Inc. (NYSE:C) will jointly manage the public offering. Pricing for the offer is expected to be revealed when regular trading opens today in New York, with a settlement on Sept. 10, ING said in a separate statement.
ING Groep N.V. (ADR) (NYSE:ING) acquired the stake when Capital One bought ING Direct USA for $9.1 billion in cash and stock in February. With the 9 percent stake, ING became the largest shareholder of Capital One, and was allowed to nominate a director to Capital One (COF)’s board. As per the deal the Dutch lender was barred from selling its stake until the lock-up ended, according to a June 2011 statement announcing the sale.
According to an analyst from ABN Amro, the deal will raise ING’s Core tier 1 ratio by about 20 basis points, and will result in a gain of 200 million euros for ING Groep N.V. (ADR) (NYSE:ING), “taking into account the strengthening of the dollar in that period and assuming a discount of 10 percent on the offering.”
“This is positive, even as the sale, as such, is no surprise, seeing the lock-up period ended,” one analyst said. “More importantly, the stake sale creates room for ING to accept a new payment in shares from Capital One in a new transaction, for ING’s U.K. online bank.”
The current divestment follows an announcement made last week for divestment of ING Direct Canada, which will help the parent company to repay the Dutch state.
The Dutch bank was under obligation from the European Union to sell its U.S. online bank, as a precondition for government bailout during the financial crisis. The insurer received 10 billion euros in aid from the Netherlands in 2008, of which it has repaid 7 billion euros, plus 2 billion euros in interest and premiums.
ING shares jumped 1.7 percent in the early trading session in Amsterdam today. Since Aug. 29, when the announcement was made to sell its Canadian online bank for 2.5 billion euros, its shares have risen by 6 percent.
Capital One shares have gained 34 percent this year, and 15 percent since the transaction was completed in February.