According to Bloomberg, Ameriprise Financial Inc. (AMP) is almost in final stages of talks to acquire the majority of the Asian asset-management unit of ING Groep NV (ING). ING is under stipulation by the European Union to sell its insurance and investment management division by 2013 as it had been granted a bailout fund by the Dutch government during the financial crisis in 2008.
However, ING will not sell its joint ventures in Asia as part of the deal. The asset-management division in Asia is worth roughly €150 million ($194 million). The final announcement of the deal will probably be made in two to three weeks as the companies are still negotiating on the financial details of the transaction.
Earlier, potential companies like Nikko Asset Management Co., Manulife Financial Corporation (MFC), Macquarie Group Ltd. and United Overseas Bank Ltd. had expressed their interests to acquire ING’s Asian asset-management unit.
Based in Amsterdam, ING Groep NV is one of the largest financial organizations in Europe. However, during the 2008 financial crisis it had to be bailed out by the Dutch Government. Therefore, under the orders from regulatory authorities, in August, the company announced the sale of ING Direct Canada – the Internet banking division of ING Bank of Canada to The Bank Of Nova Scotia (BNS). Further, in February 2012, it completed the sale of its online banking unit, ING Direct USA, to Capital One Financial Corp. (COF).
The near-term outlook of an economic recovery remains dismal. Moreover, the regulatory landscape in the U.S. is becoming stringent with the Federal Reserve’s newly proposed rules. Further, the prevailing low interest rate environment has also marred Ameriprise’s financials.
In order to mitigate these negatives, Ameriprise has been continuously expanding in Asia through its subsidiary – Threadneedle Asset Management Holdings. We expect the strategic deal with ING to help it recover its financials to some extent.
Ameriprise currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
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