NEW YORK — ING Group is weeks, if not days, away from deciding to whom it will sell its U.S. online banking business, according to a person familiar with the matter.
Capital One Financial Corp., the ninth-largest bank in the U.S. by deposits, has been interested in ING Direct USA from the start and made a cash and stock offer, the person said. General Electric Co. has put in a cash bid, according to Bloomberg News.
ING Group, of Amsterdam, is being forced as a condition of its earlier financial rescue to sell the U.S. unit. It has been one of the most aggressive in collecting deposits online since the technology boom of the late 1990s got banks thinking about the Internet. The sale puts up for bid one of the most successful deposit gatherers in the U.S. at a time when the secondary market for consumer loans is still stuttering.
ING Direct has almost $82 billion of deposits and $92 billion of assets, according to its most recent filing with its regulator, the Office of Thrift Supervision. In the first quarter, it generated a $60 million profit. The sale could raise around $9 billion for ING, according to Bloomberg News.
The Dutch bank was ordered by the European Commission to sell the business by 2013 as a condition for approving state aid during the financial crisis. The forced disposal is part of a wider restructuring plan in which ING will nearly halve its €1.3 trillion balance sheet, spinning off its insurance arm and some bank assets.
Capital One also started to build an online bank early, and has since transformed itself from mainly a credit card lender to a bank complete with branches in several markets, allowing it to fund loans with deposits.
Bloomberg News reported that GE offered cash for the unit. The manufacturer also does a large business lending to companies and consumers. GE finances those loans mainly through the capital markets, a strategy that left it vulnerable in the financial meltdown, which dried up capital market funding even for such stable companies as GE. ING Direct would offer more stable deposit funding.
An ING spokesman declined to comment.
ING depositary shares trading in the U.S. were up 2.5% recently, at $11.93.
"The market is responding positively because the sale seems to take place sooner than expected," said ABN Amro analyst Robin van de Broek.
Analysts say that a sale will help ING fully repay government support. The Amsterdam-based group still owes €3 billion in state funds, plus a €1.5 billion repayment premium. It aims to fully repay the money by May 2012.
SNS Securities analyst Lemer Salah said it is difficult to evaluate the price mentioned in the Bloomberg report as it is unclear exactly which assets are included. But against ING Direct USA's annual profit of €500 million, a selling price of around €6.5 billion would be a positive surprise for the market, he said.
ING also holds a portfolio mortgage-backed securities tied to "alternative-A" mortgages, home loans that require less documentation to originate than the standards set by Fannie Mae and Freddie Mae. The Dutch state took on 80% of the risk attached to the €27.7 billion portfolio during the financial crisis. ING Chief Risk Officer Koos Timmermans said last month that the securities could be transferred to ING's banking arm if the online bank is sold.
