ING shares down after reports on capital position

The company said it had no comment on the share price move or on a report in Dutch business daily Het Financieele Dagblad that cited analysts as saying the company was under increasing pressure to strengthen its capital.

ING shares traded at 8.32 euros at 8:35 a.m. EDT, down 17.8 percent, after touching a 13-year low at 7.56 euros earlier in the session. The DJ Stoxx European insurance index was down 3 percent.

"There was a moment of panic and then it became a madhouse," said asset manager Marcel van der Schaaf at Harmony Vermogensbeheer.

Credit protection costs for ING Bank rose on concerns the bank needed new capital, traders said.

Five-year credit default swaps of ING Bank rose to 114 basis points, or $114,000 a year to protect $10 million of debt against default, up from 98 basis points on Thursday, according to data from CMA DataVision.

Lex Koets, asset manager at Nachenius Tjeenk, said: "There have been some reports about the need for ING to strengthen its capital position. One analyst mentions a suspension of dividend, another the possibility of issuing shares."

But Koets added that this risk was already amply reflected in ING's share price.

The Dutch government has set aside 20 billion euros ($27 billion) for capital injections into financial institutions and is also prepared to guarantee interbank loans.

The finance ministry would not say whether it has been in discussions with financial institutions over such assistance.

ING's Belgian-Dutch rival Fortis was broken up earlier this month, partly nationalized by the Dutch government and partly sold off to French rival BNP Paribas as some Fortis clients and counterparty banks pulled their money from the bank.

(Reporting by Gilbert Kreijger and Niclas Mika in Amsterdam and Walden Siew in New York; Editing by Andrew Callus and Quentin Bryar)