Dutch financial services provider ING Group will sell its 83.7% stake in Deutsche Hypothekenbank, a publicly listed mortgage bank in Germany, to German banks BHF-Bank and M.M. Warburg & Company and private investors Peter Dohle Schiffahrts-KG and Josef Boquoi Familienstiftung.
For Netherland-based ING the transaction is expected to result in a net loss of about E80 million, to be booked in the second half of the year. The transaction will reduce the risk-weighted assets at ING’s banking business by E9.8 billion and free up over E600 million in Tier-1 capital, resulting in an increase of 17 basis points in the Tier-1 ratio of ING Bank NV.
ING acquired the stake in Deutsche Hypothekenbank, which specializes in commercial financing, in 1999 as part of the purchase of BHF-Bank. The sale follows the divestment of most of BHF-Bank to Sal. Oppenheim at the end of 2004.
The sale is part of ING’s strategy to focus on core business and allocate capital to those businesses that generate the highest returns.
Following regulatory approval the transaction is expected to be completed before the end of the year.
Deutsche Hypothekenbank posted a net income of E32.7 million over 2005. As of year-end 2005, the bank had total assets of E33.2 billion, including a mortgage portfolio of E7.9 billion and E13.9 billion in public sector loans and bonds.
ING will continue to serve its key Wholesale Banking clients in Germany under the name ING Bank Deutschland and the sale will not affect ING’s direct banking unit ING DiBa.