Dutch banking giant ING Groep NV (NYSE:ING) (AMS:INGA) announced Friday that it has signed an agreement with Grupo Financero Sntdr Mxco SAB de CV ADR (NYSE:BSMX), the Mexican unit of Spanish banking giant Banco Santander S.A. (NYSE:SAN) to sell its Mexican mortgage unit.
The deal will make Banco Santander, S.A. (NYSE:SAN) the second largest home loan provider in Mexico. The Spanish bank's local unit will pay ING Groep NV (NYSE:ING) (AMS:INGA) 643 million pesos ($50.7 million) in cash. ING's Mexican mortgage unit has 12.3 billion pesos on its book.
The Sale Won't Impact ING's Results
In a press release, ING Groep NV (NYSE:ING) (AMS:INGA) said that selling its mortgage business in Mexico is a part of a larger plan to divest its investment management and insurance businesses. The unit serves about 28,000 clients through 20 branches across the country. ING said that the deal is unlikely to have any impact on its results. The banks said they expect the deal to be completed in the second half of this year. It is yet to be approved by regulatory authorities.
According to Mexican banking regulators, Grupo Financero Sntdr Mxco SAB de CV ADR (NYSE:BSMX) is the fourth largest mortgage firm in the country with 353 billion pesos worth of the loan portfolio. After the acquisition, it will become the second biggest mortgage provider in Mexico.
ING Offloading Multiple Assets
ING Groep NV (NYSE:ING) (AMS:INGA) was bailed out by the government during the 2008 financial crisis. Now the company is aggressively shedding assets and cutting thousands of jobs to pay off the government aid and strengthen its capital. The Dutch bank has already sold its 9 percent stake in Capital One Financial Corp. (NYSE:COF) that was valued at about $3.05 billion. ING Groep was the largest shareholder of Capital One. That sale increased ING's Core Tier 1 ratio by about 20 basis points.
ING Groep NV (NYSE:ING) (AMS:INGA) shares were up 2.19 percent to $9.33 in New York trading at 9:34 AM EDT.