GE, Capital One Said to Vie for ING Online Bank; Bids May Reach $9 Billion
A buyer of ING Groep NV's ING Direct USA would gain control of the largest U.S. online bank and its $81.6 billion of deposits,which give lenders a funding base that is cheaper than offering debt. Photographer: Peter Foley/Bloomberg General Electric Co. (GE) and Capital One Financial Corp. (COF) submitted bids for ING Groep NV (INGA)’s U.S. online bank last week in a sale that may raise about $9 billion, said people with direct knowledge of the matter. The Dutch lender may reach an agreement to sell the ING Direct USA unit as soon as this month, said the people, who spoke on condition of anonymity because the talks are private. GE made an all-cash bid, while the offer from McLean, Virginia- based Capital One includes some stock, the people said. A buyer would gain control of the largest U.S. online bank and its $81.6 billion of deposits, which give lenders a funding base that is cheaper than offering debt. The purchaser would also have to contend with the bank’s $40.5 billion of mortgage loans and $19.9 billion of mortgage-backed securities, based on the latest figures from the Federal Deposit Insurance Corp. “Getting the ING Direct USA sale off their plate will free up management time for the other tasks at hand,” said Robin van den Broek, an ABN Amro analyst in Amsterdam. ABN Amro, which has a “buy” rating on ING’s stock, estimates the unit may fetch as much as $10.2 billion. ING gained 1.3 percent to 8.18 euros at 3:27 p.m. in Amsterdam, after climbing as much as 2.6 percent, the largest intraday advance in four weeks. GE rose 6 cents to $18.52 in New York Stock Exchange composite trading. Other Suitors Capital One and Fairfield, Connecticut-based GE may not be the only companies currently in negotiations with ING, the people said. Some potential buyers or merger partners that have held discussions with ING, including Ally Financial Inc., CIT Group Inc. (CIT), and SJB National Bank, have either ended talks or put them on hold, the people said. “The process to prepare a divestment of ING Direct USA is continuing,” Raymond Vermeulen, a spokesman for Amsterdam-based ING, said by telephone. He declined to comment on any potential bidders or the value. Spokesmen for Ally, CIT, SJB, GE, and Capital One declined to comment. GE is seeking to avoid acquiring most of ING Direct’s mortgage assets and is in talks with partners who would buy them as part of a deal, the people said. Buyers could include investment banks that trade mortgages, or pension or hedge funds that invest in them, they said. Deposit Growth The GE Capital unit, which issues bonds to fund services such as credit-card lending and leasing, could reduce its reliance on debt markets with the acquisition. Deposits tied to GE Capital’s two bank subsidiaries grew to $39.4 billion as of March 31 from $9.8 billion in 2006. The Federal Reserve plans to begin regulating GE Capital later this year. Capital One’s bid, if successful, would leave ING as one of the credit card company’s biggest shareholders, the people said. While Capital One’s status as a bank might make it easier to win approval for the deal from U.S. authorities, it isn’t clear whether ING and its regulators would be as supportive of a stock-funded bid compared with one made all in cash, the people said. A sale of ING Direct USA may also require ING to shift a pool of Alt-A mortgage assets. Those assets, mostly held in ING Direct USA, were part of ING’s 2009 government bailout, when the Dutch government agreed to assume 80 percent of the risk of the portfolio. ING may move the Alt-A assets to the parent company as part of a sale of the U.S. online bank, Chief Risk Officer Koos Timmermans said on a conference call last month.
Bullcrap. Awful deal for shareholders. The whole point of selling these assets were to repay the Dutch government. Why on earth did they accept Capital One stock as part of the purchase? It should have been all cash! Once again, they throw the shareholders under the bus. They do not care about people holding the stock. They only care about their own bonuses.
"Capital One is reported to be buying ING Direct USA for $9 billion, of which $6.2 billion will be in cash and the rest in stock. The deal is expected to solidify Capital One's position among large U.S. banks like Citigroup and JPMorgan Chase."
Yes, they confirmed ING Direct sale.
2)ING managers, please stay prudent with the money. Buy safe short Treasuries, Swiss Money Market certificates, etc. Dont rush to spend or expand. We might get another bad patch in the economic recovery.
Sure, not from Greece. This is just a small bubble in the bigger souverain debt problem. All the greek people together are much less in numbers and debt than a third of the US unemployed people.
But what happens if China (or...) gets clean in the media with their unemployed masses, their internal bad-debt problem in $Trillions, and their youngsters start trowing mololov-coctails?