ING Succeeds in Bid to Buy Barings, Beating Off Rival Consortium

Strategic Insights -

ING's acquisition of Barings marks a significant moment in the banking industry, with the Dutch-based bank overcoming fierce competition from ABN AMRO NV to secure the deal. The bid was accepted by Barings's administrators, and Ruud Polet, ING's spokesman, confirmed the agreement in Amsterdam. The acquisition is subject to court approval and will see ING take on substantial business, including corporate finance and asset management operations.

Key Takeaways:

  • ING succeeded in its bid to buy Barings, beating off a rival consortium led by ABN AMRO NV, after the administrators accepted the offer.
  • The deal is subject to court approval, but ING will acquire substantially all of Barings Plc's business, including corporate finance and asset management operations.
  • Barings collapsed under the weight of huge trading losses in the Far East, with allegations that trader Nick Leeson concealed losses of millions of pounds.
  • Leeson is currently in jail in Germany pending extradition to Singapore, where he will face trial for his alleged role in the crisis.
  • The Bank of England blames the crisis on Leeson's actions and has privately dismissed reports that the sale could be stymied by potential licensing issues.
  • ING had warned that it would not make a bid unless given a clear indication of the financial liabilities, with reports suggesting a potential shortfall of £500 million in Barings's Singapore office.
  • The acquisition is seen as a strategic move for ING to expand outside the Netherlands, following a trend of international banks seeking asset management operations.
  • Fresh details have emerged about Leeson's alleged activity, including claims that he siphoned off an £800 million banking transfer to help disguise his trading losses.

Statistics:

  • £700 million: Potential debt burden to be shouldered by ING under the acquisition deal.
  • pounds 500 million: Projected shortfall in Barings's Singapore office according to Price Waterhouse.
  • £800 million: Alleged amount siphoned off by Nick Leeson to disguise trading losses.
  • £1: Token payment offered by ING to take over Barings's corporate finance and asset management arms.
  • 233 years: Age of Barings Bank at the time of its collapse.
  • 1987: Year in which the Banking Act was passed, which includes provisions limiting a bank's exposure to investments.

Sources:

  • Barings Plc statement, London
  • Statement from ING's spokesman, Ruud Polet, Amsterdam
  • Ernst & Young press release
  • The Bank of England, press statement
  • Price Waterhouse, administrator appointed to oversee the winding up of Barings's Singapore office
  • News reports from various sources, including The Times and The Financial Times.