Feb. 4 (Bloomberg) -- ING Canada Inc. fell 15 percent after ING Groep NV said it plans to sell its 70 percent stake in Canada’s largest property and casualty insurer to shore up its balance sheet.

ING Canada fell C$4.97 to C$28.82 at 4:10 p.m. trading on the Toronto Stock Exchange. ING Groep rose 7 cents, or 1.1 percent, to 6.53 euros in Amsterdam.

The shares of ING Canada will be sold at a discount to institutional investors and other buyers, the Toronto-based insurer said yesterday in a statement. ING Groep, the biggest Dutch financial services company, plans to raise as much as C$2.16 billion ($1.75 billion) selling the stake.

“ING, the parent company, needs capital and ING Canada has never been a core operating company for them,” said Ian Nakamoto, director of research at MacDougall MacDougall & MacTier Inc. in Toronto, which manages about C$3.25 billion, including insurance companies. “It’s always been a bit of an unusual fit.”

The Dutch bank is selling assets and cutting 7,000 jobs after reporting its second straight quarterly loss last week on rising debt writedowns. The Amsterdam-based company, which traces its roots to 1743, received a 10-billion-euro ($13 billion) lifeline from the Dutch government last year, the first company to draw on the funds.

“We will increase our focus on businesses and regions where we have a strong sustainable position in savings and investments,” Jan Hommen, interim chief executive officer of ING Groep, said in a statement.

Losing Control

ING Groep will give up control of the Canadian insurance business through the stock sales, selling its entire 70 percent stake, according to a separate statement from the parent company. The bank had first said yesterday it would keep a 7 percent stake.

The bank plans to raise C$905 million selling shares at C$25 each to unidentified institutional investors in a so-called private placement led by CIBC World Markets and Goldman Sachs Group Inc. That’s 26 percent less than the ING Canada price of C$33.79 before trading was halted yesterday on the Toronto Stock Exchange.

“It’s a non-core asset and I think the guys who bought it on the private placement probably drove a pretty hard deal,” said Nakamoto, whose firm doesn’t own ING Canada shares.

ING also plans to sell as much as C$1.12 billion in stock to investors at C$26.35 each in a public offering through CIBC and TD Securities. The sales are expected to close on Feb. 19, according to the statement.

The bankers managing the sale have an option to sell additional shares to meet demand, bringing total proceeds to as much as C$2.16 billion, ING said. ING Canada won’t receive any proceeds from the sale.

ING Canada on Jan. 26 reported a net loss of C$64.1 million, or 53 cents a share in the fourth quarter, compared with a profit of C$95.8 million, or 77 cents, a year earlier.

The ING Direct Canada online bank isn’t affected by the sale, the lender said.

To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net; Doug Alexander in Toronto at dalexander3@bloomberg.net.

Last Updated: February 4, 2009 16:19 EST