ING has become the latest European bank to launch a buyback of its own debt in order to comply with EU regulations.
The Dutch lender said it would tender an offer for €2.6bn (£2.2bn) of securities to prepare its insurance unit for a sale mandated by the European Commission on competition grounds.
The bank needs to remove change-of-control clauses in the terms and conditions of the insurer’s debt that could force it to give bondholders a huge pay-out if it is sold.
Instead, the bondholders will be offered instruments with the same maturity and coupon payment but their debt will be transferred to ING Group, which has a better credit rating than its insurance units.
Like many of its European rivals, ING is being forced to divest large chunks of its business so as to reduce its dominance.
It had planned an initial public offering (IPO) for its Eurasian insurance business and one for its American equivalent. But the troubled state of Europe’s capital markets mean it has now decided to split up the offering and opt for a straight sale of its Asian and European businesses separately.
But the bank is still planning an IPO for its American insurance unit. It has until the end of 2013 to get rid of the assets.