ANZ buyout of ING won't benefit frozen fund investors

Strenuously denied rumours ING would sell out of its Australasian joint venture with ANZ Banking Group have proved correct, with ANZ yesterday announcing it would pay A$1.76 billion ($2.12 billion) for the Dutch financial services giant's 51 per cent stake.

However there is no comfort in the news for those ING New Zealand customers who have lost money in the company's two frozen "structured credit funds".

A potential offer of additional compensation made by ANZ to its customers exposed to the funds will not be extended to ING customers.

ANZ National - New Zealand's biggest bank - is now this country's biggest KiwiSaver provider as ING is the market leader in the state-subsidised retirement savings scheme with over 250,000 customers.

ING is also New Zealand's second-largest retail funds manager and has a fast-growing insurance business here.

ANZ Banking Group acting chief executive and former ANZ National chief executive Graham Hodges said it would be business as usual at ING NZ for the time being with chief executive Helen Troup remaining in place and head office staying in Auckland.

While ANZ has rights to continue using the ING brand for 12 months, group chief executive Mike Smith said his company would abandon the brand "as fast as we can".

Arguably, the reasons for doing so are strongest on this side of the Tasman where ING's reputation has been tarnished by the frozen funds affair.

Gerard Prinsen, who heads the Frozen Funds Group representing investors who have lost money in ING's Diversified Yield Fund and Regular Income Fund, had understood ING was likely to sell out for some time but this was repeatedly denied by the company.

"Only a couple of months ago ING was adamant they were not going to be sold to anyone."

Prinsen believed the transaction opened up the possibility that a potential additional amount of compensation for ANZ customers exposed to the funds, over and above a July settlement that returned about 60 per cent of investor funds, could be extended to ING customers who have been unable to seek similar redress.

That possibility was firmly quashed by Hodges at a media briefing yesterday.

"The ANZ offer was because of the distribution end of the business there, which was the ANZ financial planners. What we're buying in New Zealand is ING's manufacturing end, which was completely separate.

"That offer won't be changed and it won't be extended."

As part of yesterday's deal, which remains conditional on regulatory approvals, ANZ National is purchasing ING Group's interests in the two funds for A$55 million.

ANZ National chief executive Jenny Fagg welcomed the announcement.

She said the acquisition "will strengthen our wealth management position in New Zealand by increasing our funds management and life insurance capabilities, currently offered to customers through our ANZ and The National Bank brands".

The sale, which is expected to close by the end of the year, is part of the worldwide restructuring plan ING announced in April.

The company, which received state aid last October and a Government asset guarantee in January, is in the process of raising €6 billion to €8 billion ($12.24 to $16.32 billion) through asset sales.

ING said it would book a net profit of €300 million on the ANZ deal, which will also free up €900 million of capital.

TAKEOVER
* ANZ will pay A$1.76 billion for the remaining 51 per cent of ING's Australasian operations.
* In New Zealand that includes ING's KiwiSaver operation, its other funds management businesses and insurance.
* The combined funds under management for ANZ National and ING NZ are about $12 billion.
* The transaction changes nothing for ING's frozen funds customers, who will not gain the benefit of ANZ's potential offer of extra compensation to its affected customers.
* ANZ will drop the ING brand "as fast as we can".

- ADDITIONAL REPORTING: AGENCIES