ING ACCEPTED a government cash injection yesterday after a slump in its share price and the revelation that it would make its first quarterly loss.

The Dutch banking and insurance group held talks with the government over the weekend and sought up to €9 billion after it acknowledged it wanted to bolster its balance sheet on Friday.

The deal with the government makes ING the first Dutch financial group to apply to a €20 billion fund created a week ago to recapitalise banks and insurers. It had said it would explore other options.

Ahead of a formal announcement last night, it was unclear what the Dutch government would seek in exchange for a cash injection. The government has said taking preference shares - which pay a fixed rate of interest but have no voting rights - in companies that it invests in is an option, but it is also open to other methods of reflecting its equity.

ING warned on Friday that it would post a €500 million loss for the third quarter owing to more than €2 billion in impairments on equity, bond and real-estate investments, losses following the collapse of other banks and higher loan loss provisions. The group's share price dropped 27 per cent on Friday, its biggest one-day decline since it was formed in 1991.

Although the lender sought to emphasise that it had no urgent need of fresh capital, ebbing investor confidence might have forced its hand in the wake of the demise of Fortis, its Belgian-Dutch rival. Fortis was forced to turn to the Belgian, Dutch and Luxembourg governments for cash last month when its share price slumped in the face of repeated assurances that its capital position was sound.

While ING has not seen its capital as stretched as Fortis, which was subsequently nationalised in the Netherlands and sold to BNP Paribas in Belgium, it acknowledged that it would have to follow an international trend of bolstering its capital. - ( Financial Timesservice)