ING Group has announced that an agreement has been reached to sell its 83.7% stake in Deutsche Hypothekenbank AG, a publicly listed mortgage bank in Germany which specialises in large-scale commercial financing, to German banks BHF-Bank AG and M.M. Warburg & CO and private investors Peter Döhle Schiffahrts-KG and Josef H. Boquoi Familienstiftung.
For ING Group, the transaction is expected to result in a net loss of about €80 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 €9.8 billion and free up over €600 million in Tier-1 capital, resulting in an increase of 17 basis points in the Tier-1 ratio of ING Bank NV.
Deutsche Hypothekenbank posted a net income of €32.7 million over 2005. As of year-end 2005, the bank had total assets of €33.2 billion, including a mortgage portfolio of €7.9 billion and €13.9 billion in public sector loans and bonds.
The sale is part of ING's strategy to focus on core business and allocate capital to those businesses that generate the highest returns. The transaction is subject to applicable regulatory approvals and is expected to be completed before the end of the year.
ING acquired the stake in Deutsche Hypothekenbank in 1999 as part of the purchase of BHF-Bank AG. The sale follows the divestment of most of BHF-Bank to Sal. Oppenheim at the end of 2004. ING will continue to serve its key Wholesale Banking clients in Germany under the name ING Bank Deutschland AG and the sale will not affect ING's direct banking unit ING DiBa.