ING reveals sale of car lease unit to BMW.
Dutch firm ING Groep N.V. (NYSE:ING) announced on Friday that it is selling its car lease financing unit to BMW – Bayerische Motoren Werke AG (ETR:BMW) for 700 million euros ($1 billion) in cash, it will use the proceeds to help pay back its 10 billion euro bailout from the Dutch state issued during the 2008 financial crisis. ING is in the process of restructuring its debts, it has already sold several assets to repay the state.
What is surprising is that the car leasing unit wasn’t initially allocated to for potential divestment, but responding to media reports on June 20, ING said the unit had been put up for sale. A Dutch paper in June reported that ING’s car lease unit’s operations could be worth around 4 billion euros, comprising 3 billion euros of debt and about 750 million euros of extra capital. The unit, which deploys 240,000 cars around Europe, had 1,200 employees and a balance sheet which totalled 3.5 billion euros on December 31, 2010, ING said. “The sale of ING Car Lease illustrates ING’s continued actions to streamline our business and simplify the company”, said Jan Hommen,” CEO of ING Group. The sale of ING car unit to BMW’s car lease unit Alphabet, will release 530 million of capital, adding 17 basis points to the bank’s core tier ratio, ING announced on Friday.
“Our priority is to repay the Dutch state, so yes the proceeds will be used to pay back the State” ING spokeswoman Carolien van de Giessen said on Friday. The deal is expected to close in the fourth quarter. After the announcement ING shares were up 0.5 percent at 8.55 euros, in line with an 0.8 percent rise of the STOXX Europe 600 Insurance index.
