ING’s £7bn issue to help pay off bailout

Dutch bank ING today outlined plans to repay government rescue funds by raising billions of euros from investors.

The firm, which owns online bank ING Direct, launched a 7.5 billion (£6.9 billion) rights issue to pay back half of the 10 billion state aid provided by the Dutch government.

It also said it will split itself in two as part of a restructuring deal with the European Commission, transforming itself over the next four years into a smaller Europe-focused bank.

The restructuring deal, which involves splitting its banking and insurance operations, is the most striking example yet of the deep changes the European Union plans to force on banks that received state aid. Royal Bank of Scotland and Lloyds Banking Group, 70% and 43% owned by the UK taxpayer respectively after multi-billion pound bailouts, are expected to be ordered to sell a number of units by the commission.

Lloyds is also said to be planning to raise £23 billion to shore up its balance sheet and avoid the UK government's Asset Protections Scheme, set up to insure toxic loans.

It comes as the global banking system returns to health following hundreds of billions of pounds of emergency state support.

ING said it will post a third-quarter profit of 750 million compared with a loss of 568 million in the same period last year.

Its rights issue is underwritten by Goldman Sachs and JPMorgan.