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ING shares halted due to high volumes

Source: Reuters - Wed 28th Oct 2009

ING shares were sold sharply lower the day after it announced plans for a highly dilutive rights issue, before the record number of shares trading hands caused a technical glitch and the share's suspension.

Due to the high trading volume of almost 99.4 million shares, compared with a daily average of 22.8 million, a technical error occurred, halting share trading around 3:45 p.m. British time, a spokeswoman of exchange operator Euronext said.

"A technical problem was caused due to the high order volume concentration, halting the share trade" the spokeswoman said.

The closing price for Tuesday was set at 8.983 euros, down 6.1 percent from the previous closing price, and trade would resume again on Wednesday, the spokeswoman said.

Shares in the Dutch bancassurer swung wildly on Tuesday, falling as much as 14.5 percent, and analysts said a pending 7.5 billion euro (6.8 billion pound) rights issue was likely to result in a 50 percent dilution for current shareholders.

On Monday, when ING announced its rights issue plan and a split of the group into a separate bank and insurer, 91.6 million shares traded hands and the stock lost 18 percent of its value.

ING said on Monday it would split into two units, repay some of its Dutch state aid early and launch the massive rights issue, all part of its restructuring talks with the European Union.

ING's breakup plan continued to weigh on shares of other state-aided banks such as Royal Bank of Scotland, Lloyds Banking Group and KBC Group, which fell as much as 8 percent.

Analysts have questioned the reasoning for ING's rights issue and cut their price targets substantially. 

KBC Securities analyst Dirk Peeters estimated in a note on Tuesday that the rights issue would be done at a range of 7.5 euros to 8.5 euros per share, indicating dilution of 45 percent to 50 percent and an increase in outstanding shares to 3 billion.

Cheuvreux and Keijser Capital downgraded the stock and UBS removed it from the firm's European "key calls" list.

"We note that the share issue is expected to be below current book value and as yet we do not have a complete picture of future net income on existing businesses" Keijser analyst Nico van Geest said in a research note.

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