* EU says loan deal valuation "not conservative enough"
* Some estimates point to Tier I capital shortfall
* Analysts see some sort of capital hike likely
By Ben Berkowitz
AMSTERDAM, Sept 18 (Reuters) - Dutch bancassurer ING, already in the middle of a global restructuring because of the 10 billion euros ($14.70 billion) in state aid it received last October, now faces even greater risks from an EU review of its separate loan guarantee deal with the Dutch state.
Analysts say depending on how the European Commission rules, the company could end up with a core capital shortfall that would require it to take decisive action.
In January the Dutch government agreed to take 80 percent of a 27.7 billion euro portfolio of lower-quality, mostly U.S.-based mortgage-backed securities. The state paid ING 90 percent of the portfolio's face value.
But on Sept. 15 the EU said the state may have overpaid and that ING might have gotten an unfairly good deal. The costs if the EU orders the portfolio revalued could be substantial.
Following are some scenarios for what could happen next:
PORTFOLIO REVALUATION
"I think it's extremely likely" the EU will order the portfolio be revalued lower, Evolution Securities analyst Jaap Meijer said. His forecast is for the valuation to be cut 10 percentage points to 80 percent of par.
Analysts say that could equal just 2 billion euros.
"We think that ING is extremely undercapitalized," said Meijer, who was among the earliest to call for a capital increase at the Belgian-Dutch financial group Fortis in 2008 before its ultimate breakup.
Analysts at SNS Securities modelled a variety of scenarios around a potential revaluation, and found in the worst case ING could take a hit of 60 basis points to its core Tier I ratio.
But ING's Tier I ratio stood at just 7.3 percent as of June 30, meaning a hit that size would leave it with a capital shortfall by regulatory standards.
THE DEAL PASSES AS WRITTEN
Dutch Finance Minister Wouter Bos has defended the deal, which he says was done at a fair price for both sides.
Bos intends to argue for the deal with European Competition Commissioner Neelie Kroes -- herself a long-time Dutch politician whose relations with the current Dutch government are seen as being less than warm.
But Kroes is cracking down on banks that received state aid, and is not expected to go any easier on ING than she is on various Belgian and British banks.
The European Commission is threatening to break up Britain's Lloyds Banking Group and force asset sales and limit dominant market positions at Royal Bank of Scotland and other European lenders who took help.
BACK TO BASICS
There is also the pending question of how the EU will rule on the 10 billion euro aid package from last October. ING launched an asset sale program in April that it hoped would satisfy Brussels' desire for aided banks to restructure.
But it warned on Aug. 12 that the talks with the EU, which it hoped to start in the third quarter, could force it to pursue additional strategic options.
Analysts took that to suggest that ING management fears the imposition of deeper cuts by the EU.
In the meantime ING is pushing ahead with the sale of its Swiss and Asian private banking assets. Sources close to the deal have said ING could potentially raise up to $2 billion with that sale, which is expected to be announced sometime in the next few weeks.
Ultimately, some suggest it could lead to a full split of ING into separate banking and insurance companies.
Many investors and analysts believe this is where the company is headed over the next 10 years. It already has established separate management boards for the units.
(For a story on the Dutch government's plan for the future of nationalised bank ABN AMRO, please click on nLI99627) (Editing by Rupert Winchester)