ING has reached an agreement to sell its life insurance and wealth management venture in Australia and New Zealand to ANZ, its joint venture partner.

Under the terms of the agreement, ING will sell its 51 per cent equity stakes in ING Australia and ING New Zealand to ANZ, who now will become the sole owner of these businesses. ING will receive €1.1 billion in cash from ANZ, the Dutch financial services group said in a statement.

ING is spinning off some of its assets in a bid to raise further capital to bolster its depleted balance sheet. Along with other Western financial institutions, ING has been hit by the fallout from the credit crunch.

Meanwhile, ING is also in the process of selling its Asian private banking businesses. In a separate report – carried elsewhere on this publication – Julius Baer is reportedly no longer in the running to buy these assets.

Jan Hommen, CEO of ING Group said: "This transaction is another important step in executing our back to basics strategy. The sale of our insurance and wealth management operations in Australia and New Zealand is further proof of our determination to simplify the organisation by focusing on fewer, strong franchises that form a coherent group. This shows once more that our continued transformation is well on track." 

The transaction will generate an estimated net profit for ING of €300 million. The cash proceeds  and the estimated net profit will improve the debt/equity ratio of ING Insurance by 345 basis points. The transaction is expected to free up €900 million of capital, media reports said.

ING and ANZ merged their insurance and wealth management operations in Australia and New Zealand in 2002. The operations now employ 2,200 staff in Australia and 500 in New Zealand.

ING remains active in Australia with ING Direct, ING Investment Management, ING Wholesale Banking and ING Real Estate, which are not impacted by the transaction. The deal is subject to regulatory approvals and is expected to be booked and closed in the fourth quarter of 2009.