Oct. 20 (Bloomberg) -- ING Groep NV, the biggest Dutch financial-services firm, rose as much as 24 percent in Amsterdam trading after it got a 10 billion-euro ($13.4 billion) lifeline from the Netherlands.

ING traded up 1.48 euros at 8.81 euros as of 2:15 p.m., valuing the company at 18.3 billion euros. The gain almost erased ING's record decline of 27 percent on Oct. 17, when the Amsterdam- based firm said it will report its first quarterly loss.

``ING had little choice but to raise capital over the weekend,'' said Duncan Russell, an analyst at JPMorgan who has an ``overweight'' rating on the shares, in a note to clients. ``It is wise in our view to raise significantly more than the minimum needed so as to take the issue completely off the table.''

ING is the first to draw on the 20 billion euros that the Netherlands made available to financial firms on Oct. 10. The government will buy non-voting preferred shares and appoint two representatives to the board of ING, which will scrap this year's final dividend, the company said yesterday. The securities pay 8.5 percent annual interest, Dutch Finance Minister Wouter Bos told reporters.

ING separately agreed sell its Taiwanese life insurance unit for $600 million to Taipei-based Fubon Financial Holding Co., the two firms said in a joint statement today.

`Significant Buffers'

The company now has ``significant buffers'' to ``ride through the storm,'' Chief Financial Officer John Hele said in an interview with Bloomberg Television. ING has ``actually seen quite a strong inflow of customers,'' particularly in the U.S., as people ``distribute money around banks,'' he added.

The government will have a say in ING's executive compensation and get a share of company profit, Chief Executive Officer Michel Tilmant said.

``Today, ING is very confident about its financial and capital positions,'' and the company doesn't expect to need another capital injection, Tilmant said. ``In terms of liquidity, ING is very robust.''

The non-voting preferred securities sold to the state won't dilute existing shareholders and will lift the bank's core Tier 1 capital to about 8 percent, according to ING's statement. The bank had core Tier 1 capital, an indicator of a company's ability to absorb losses, of 6.5 percent as of Sept. 30, it said.

``A core Tier-1 ratio of 8 percent is OK given the quality of ING's loan book,'' said Thomas Nagtegaal, an Amsterdam-based analyst at Royal Bank of Scotland Group Plc. Nagtegaal has a ``buy'' recommendation on ING. ``The question that remains is whether this government intervention will have a negative impact on ING's commercial performance.''

Loan-Loss Provisions

ING said Oct. 17 it expects a third-quarter loss of 500 million euros as it takes 1.6 billion euros of writedowns. The writedowns include stocks, bonds, structured investments and investments related to Lehman's bankruptcy, as well as lower real- estate values. Loan-loss provisions totaled about 400 million euros, the bank and insurer said. ING plans to report third- quarter results Nov. 12.

ING, which traces its roots back to 1743, serves more than 75 million customers around the world. It was one of the 20 largest financial institutions worldwide as of March, according to its Web site. The bank had more than 124,000 full-time employees, according to figures for the 2007 financial year.

ING will sell its Taiwanese unit, with 2.2 million customers, in a deal scheduled to close in the first quarter, according to today's statement. Fubon, Taiwan's second-largest financial- services firm by market value, will issue new shares to ING to fund the acquisition.

Global Bailouts

Governments from Washington to London to Berlin have rushed to shore up banks' capital and unlock lending since credit markets froze up following the Sept. 15 bankruptcy of Lehman Brothers Holdings Inc. In the U.S., Treasury Secretary Henry Paulson plans to spend $250 billion of a $700 billion bailout package to buy non-voting preferred equity stakes in banks.

Rabobank Groep NV, the world's biggest agricultural lender, won't make use of the government fund, company spokesman Raymond Salet in Utrecht said today.

The Hague-based Aegon NV, the owner of U.S. insurer Transamerica Corp., is ``looking closely at the government's capital facility program, to fully understand if and under what terms participation in the program would be beneficial to Aegon and our shareholders,'' company spokesman Greg Tucker said today.

The Dutch government bought local units of Fortis and ABN Amro Holding NV earlier this month for 16.8 billion euros.

``Fortis wouldn't exist anymore if we wouldn't have taken steps,'' Bos said. ING ``is a different case. We are talking here about a very strong bank.''

Not Transferable

ING plans to sell the government securities that the Dutch Central Bank will consider part of core Tier 1 capital. The securities will have equal ranking with ordinary shares in a liquidation and are transferable only with permission of ING and the Dutch Central Bank, they said.

ING can buy some or all of the securities at any time for 150 percent of the issue price of 10 euros per security. The annual coupon will only be paid out if dividends are awarded over the preceding year and will be increased if the dividend exceeds the coupon, the Finance Ministry said in a statement. The government doesn't ``want to be here forever,'' Hele said.

Based on 2008's interim dividend, The Netherlands will receive 425 million euros on May 12, 2009, from ING, company spokeswoman Carolien van der Giessen said.

ING will use half the 10 billion euros to boost shareholders' equity at the banking unit and 2 billion euros to bolster the insurance unit. The remaining 3 billion euros will reduce ING's debt-equity ratio to 10 percent from 15 percent, the company said.

To contact the reporters on this story: Jurjen van de Pol in Amsterdam jvandepol@bloomberg.net; Martijn van der Starre in Amsterdam at vanderstarre@bloomberg.net;

Last Updated: October 20, 2008 08:49 EDT