The Netherlands based ING bank has inked an agreement with Hong Kong's AIA, to offload its Malaysian insurance business for €1.3bn in cash.

The transaction comprises ING’s life insurance and employee benefits business as well as 60% stake in Public Takaful Ehsan, a joint venture between Public Bank and Public Islamic Bank.

ING CEO Jan Hommen said that the sale is the first major step towards divestment of its Asian insurance and investment management businesses under company restructure program.

Following the completion of deal, the Dutch underwriter expects to earn a net gain of €780m, subject to customary potential adjustments at closing of transaction.

The acquisition is expected to close in the first quarter of 2013, pending regulatory approvals in Malaysia and the Netherlands.

The Malaysian insurance businesses serve over 1.6 million customers through nearly 1,200 employees and approximately 9,200 tied agents.

ING is selling its direct banking businesses to streamline operations and repay the state aid it received during the 2008 financial crisis.

AIA serves more than 24 million individual policies holders as well as over 10 million participating members of group schemes in Asia Pacific region and offers retirement planning, life insurance and accident and health insurance products.