Netherlands' Insurer ING Buys CitiStreet For $900M

May 3, 2008 12:42 p.m. EST

Quincy, MA (AHN) - ING Groep NV, Netherlands' largest financial services firm, agreed to buy CitiStreet LLC, a joint venture pension fund by Citigroup and State Street Corp., for $894.6 million in cash, reports said Friday.

The sale were among the latest moves by Citigroup, the largest bank in the U.S., to raise capital after $40 billion of writedowns and credit losses. The U.S. bank has written down $12 billion worth of assets due to volatile credit markets.

CitiStreet services "are not strategic priorities for us," says Charles Johnston, president of Citi Global Wealth Management, in a statement.

ING said on Tuesday that the transaction will bring ING's assets to $351 billion making it the third largest in the United States, according to a Market Scan report.

ING officials said the acquisition will have no significant impact to ING overall and that it will finance the purchase internally.

ING shares were up by two percent to $38.6 at noontime Friday in Amsterdam, while Citigroup rose 40 cents, or 1.5 percent, to $26.39 late in the afternoon at the New York Stock Exchange.