Australia and New Zealand Banking Group Ltd. (ANZBY) said Friday it will buy ING Groep NV's (ING) 51% stake in their Australia and New Zealand wealth management and life insurance joint venture for EUR1.1 billion.

The cash deal makes good on ANZ's ambitions to boost its exposure to the fast growing wealth management sector, where it has been underweight compared to many of its peers.

It will also free up capital for ING, which is selling assets as part of its "Back to Basics" program as it looks to repay a government lifeline.

Australia's biggest banks have been capitalizing on the weakened positions of some of their global peers to build market share. ANZ recently struck a deal to buy some of RBS' Asian banking operations for US$550 million.

"ANZ has been able to take advantage of the global financial crisis and ANZ's strong balance sheet to advance our strategy," ANZ Chief Executive Mike Smith said.

ING expects a profit of around EUR300 million on the sale, which will improve its debt to equity ratio. It will also free up an estimated EUR900 million of capital for the firm, it said in a statement.

"The sale of our insurance and wealth management operations in Australia and New Zealand is further proof of our determination to simplify the organization by focusing on fewer, strong franchises that form a coherent group," ING Chief Executive Jan Hommen said.

The group is targeting EUR6 billion-EUR8 billion in asset sales to help pay down a EUR10 billion lifeline it received from the Dutch government last October to underpin its core capital.

It has put its Asian and Swiss private banking assets up for sale, either to be bought together or separately. Offers for both are estimated at around US$2 billion and ING is likely to decide on the winning bidders next month, a person familiar with the situation said Thursday.

ANZ's Smith said he wasn't interested in the ING private banking business in Asia, but expects more opportunities to emerge around the region as the fallout from the global financial crisis forces more banks to shift their focus back to their home markets.

Australian lenders have avoided the worst of the global financial crisis, and Melbourne-based ANZ Bank had been sitting on around A$4 billion in cash, following a recent capital raising, for acquisitions.

ANZ has differentiated itself from its domestic peers by targeting growth in Asia, but Smith said Friday's deal was consistent with the group's strategy to become a "super-regional" player.

"ANZ's super regional objective is not just an Asian strategy - it's a regional strategy founded on strong positions in our Australian, New Zealand and Asia Pacific markets," he said.

Still, ANZ, which will be able to use the ING name for the business for 12 months, could roll out the wealth management platform into other countries around Asia, Smith said.

"The value proposition is also compelling with an attractive purchase price combined with significant revenue opportunities and selected cost synergies," he said.

ANZ said it expects the deal, which is expected to close by the end of the year, to boost its earnings per share in the 2010 financial year, even before taking into account "significant" synergies.

After the ING transaction, ANZ's Tier 1 capital will fall to 9.5% from 10.2% at the end of June.

ANZ shares rose on the back of the deal, with some investors relieved that the bank had not pursued a pricey acquisition in Asia.

At 0525 GMT, ANZ shares were up 2.4% at A$24.06, while the benchamrk S&P/ASX 200 index was up 0.4%.

Johan Vanderlugt, an analyst at Daiwa, said: "We applaud the deal for its strategic fit and the return on equity upside coming from the very profitable and stable Australian wealth management business."

ANZ said it expects ROE in the mid-teens for its wealth management business. Analysts said the price terms seemed attractive for ANZ.

Australia's other major banks have also been building out their financial services business as international groups pull back their operations.

National Australia Bank Ltd. in June agreed to buy some of Aviva PLC's Australian business for A$825 million and in August said it would take a majority stake in Goldman Sachs JBWere's private wealth management business in Australia and New Zealand for A$99 million.

Other notable deals include Commonwealth Bank of Australia's acquisition of BankWest from HBOS for what was considered a bargain-basement price.

ANZ's Smith said that he'd approached ING about buying out the joint venture, in which ANZ currently holds 49%, for some time. ING's regional Chief Executive for Investment Management Alan Harden told Dow Jones Newswires that the two had started talks "a few months ago."

ING will retain its ING Direct, ING Investment Management, ING Wholesale Banking and ING Real Estate operations in Australia.

The deal remains subject to regulatory approval.

-By Lyndal McFarland, Dow Jones Newswires; 61-3-9292-2093; lyndal.mcfarland@dowjones.com

(Robin Van Daalen in Amsterdam and Ellen Sheng in Hong Kong contributed to this article)