Another big bank is set to hive off its funds management business to shore up its balance sheet, with this week’s announcement of the proposed divestments by ING Group.
The Dutch-based global firm announced it would either float or sell both its funds management and insurance arms within the next four years to help accelerate repayment of facilities granted to it by the Dutch Government in the middle of the financial crisis last year.
ING Investment Management is ranked 15th in the world for funds under management, as at December last year, according to an annual survey by Watson Wyatt Worldwide and Pensions and Investments magazine, with $777 billion. It has about 3,500 staff operating in 34 countries.
The proposed ING sale follows the sale by Barclays Bank of its funds management subsidiary, Barclays Global Investors, to BlackRock, which becomes the worldÃ¢â‚¬â„¢s largest funds manager, with $2.8 trillion, when that deal is finalised on December 1.
There were already moves afoot, however, for big broking firms to de-couple their funds management arms prior to the financial crisis because of regulatory concerns over cross-selling and the provision of advice, especially in the US.
The acquisitive BlackRock merged with the former Merrill Lynch Investment Management in 2007 and Credit Suisse Investment Management with Aberdeen Asset Management this year.
With ING, the EU was concerned it was paying too little for its state guarantee. The company will now repay half of the 10 billion euro (about $17 billion) from the Dutch government in December after it completes a 7.5 billion euro rights issue.