ING: Update on restructuring plans

ING (6,13 EUR, 2,53%) issued an update on the restructuring plans of the group. The base case scenario the group has been working on since November 2010 is a US-lead IPO and a Europe/Asia-lead IPO, to take place in 2012.
In view of the uncertain economic outlook and turbulent financial markets, especially in Europe, ING decided to explore other options for its Asian Insurance and Investment Management business.

The adjusted restructuring will look as follows: 
 - USA: IPO plans for Insuranceand Investment Management remain unchanged; 
 - Asia: Explore other options for Insurance/Investment Management. 
 - Europe: Preparation for stand-alone of Insurance and Investment Management.

Tomorrow, ING is organizing an investor day in Amsterdam.

Our View:
The revision of ING’s restructuring plans does not jeopardize its repayment capacity of the remaining € 3.0bn state aid and € 1.5bn penalty to be paid. Worse case it will only delay full repayment of the negative double-gearing and hybrids at holding level. This does not change anything to our investment case or valuation.
Selling (or other alternatives) of the Asian insurance activities shouldn’t present a problem. For the European operations it is less obvious to do an IPO or divest the business. ING is currently still in litigation with EC about its restructuring plans and more specific that part that is linked to the reduction of penalty paid on state aid, which the EC considers to be state aid as well. Should ING win, it can rek-negotiate (read reduce) the restructuring and hold on to part of its European Insurance franchise.

Conclusion:
We maintain our Accumulate rating and € 9.0 target price.