ING Group awarded time by the European Commission for divestment efforts
The ING Group, one of the world’s largest financial services companies, has been working to divest its insurance operations over the past several months. The company has been met with several challenges in this task and has petitions the European Commission, the legislative arm of the European Union, for more time, a request that has been granted this week. The European Commission had originally set a deadline for the company it divest its insurance businesses by the end of 2013, but the ING Group has now been awarded more time to complete this task.
Company required to divest in insurance operations around the world
The ING Group was one of the major financial services and insurance institutions caught in the European financial crisis. The crisis has dealt a grievous blow against numerous industries and has threatened the financial stability of many countries in the European Union. In an effort to save the ING Group, the Dutch government approved a bailout of the company for more than $5 billion. The bailout is very similar to a similar event that occurred in the U.S., where the federal government also provided financial aid to large insurer AIG.
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Bailout sparks major changes for ING Group
Per the bailout, ING Group must sell off approximately half of its insurance businesses in Europe and Asia. Initially, this will be done through public auctions, with the majority of the funds raised going to the Dutch government and the European Union. The ING Group must pay a 50% premium on the total bailout amount, a measure that the Dutch government believes is adequate compensation for taxpayers. According to the new deal with the European Commission, the ING Group now has until the end of 2018 to divest from its multiple insurance businesses.
ING Group to exit US market by end of 2016
The European and Asian markets are not the only places where the ING Group will have to divest. The company must also sell off 25% of its U.S. business by the end of 2013. By the end of 2016, the ING Group will be required to sell off the rest of its business in that country. The ING Group will likely maintain a presence in the European market, but will be greatly diminished in the insurance sector.