Australia : ANZ Bank to Buy Rest of ING Venture for $1.5 Billion.

Australia & New Zealand Banking Group Ltd. agreed to buy ING Groep NV s stake in their life insurance and wealth-management venture for A$1.76 billion ($1.5 billion) in the bank s biggest acquisition since 2003.

Australia s fourth-biggest lender will pay cash for ING s 51 percent stake in ING Australia and ING New Zealand, the Melbourne-based bank said in a statement today. Amsterdam-based ING, which received a 10 billion euro ($14.6 billion) lifeline in October from the Netherlands, will book a profit of 300 million euros from the sale, it said in a statement.

Australian banks, which remained profitable throughout the financial crisis, have raised capital via share sales to help fund asset purchases from distressed sellers. ANZ Chief Executive Officer Mike Smith, who previously headed HSBC Holdings Plc s Asian division, in August agreed to buy Royal Bank of Scotland Group Plc s units in six Asian countries.

ANZ is taking advantage of the retreat by international banks, said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne. The deal is symptomatic of a very healthy domestic banking sector.

ING, which is seeking to raise funds to repay the Dutch state, and ANZ merged their insurance and wealth management divisions in Australia and New Zealand in 2002. Under the terms of the joint venture, ANZ and ING were unable to independently undertake wealth management takeovers without opening the deal to the other partner.

More Attractive

ING s other businesses in Australia -- ING Direct, ING Investment Management, ING Wholesale Banking and ING Real Estate -- are not affected by the transaction, the Dutch company said.

ANZ has been in the joint venture for seven years now and will have a pretty good handle on what it is buying, Ken Hanton, senior credit analyst at National Australia Bank Ltd. in Sydney, said in a note today. From a credit perspective, this makes the acquisition far more attractive than higher risk alternative options.

ANZ shares climbed 1.3 percent to A$23.79 at the close in Sydney. The shares have surged 56 percent this year, the second- biggest gain in the six-member S&P/ASX 200 Banks Index.

ANZ will fund the purchase through internal capital, and will have a Tier 1 capital ratio of 9.5 percent after the deal, down from 10.2 percent at the end of June. The price tag for ING s stake in the venture equates to around 11 times normalized 2008 earnings, ANZ said.

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