Like many other global financial institutions, ING Groep NV (NYSE: ING) got emergency government funding a year ago -- to stave off the financial chaos. The loan amounted to about 10 billion euros. But, according to the European Union, it appears that the assistance was a bit too generous. As a result, the powerful organization has pressured ING to start to pay back the loans.
Of course, this will mean lots of dilution for shareholders. In fact, ING plans to issue rights to raise about $11.3 billion in equity capital. There will also be the sale of the insurance business (which will likely be completed over a four year period). Oh, and ING will be selling off its popular online banking business.
Keep in mind that ING has already been busy with unloading assets, such as its Swiss private bank to Julius Baer as well as the US reinsurance arm.
As should be no surprise, the shares of ING got battered -- down 18% to $14.10. Essentially, the company will be much smaller.
Interestingly enough, ING may not be alone. That is, the EU may be targeting other financial institutions, requiring them to split up and pay back loans.
Tom Taulli is the author of various books, including The Complete M&A Handbook
Entrepreneur's Journal: Want to get a piece of the Buffett/Goldman honeypot?
The week in preview: No turkey earnings from Tyson, Hormel, Cracker Barrel ...
Comfort Zone Investing: Intel is saying something ... can you hear it?
Add your comments