UPDATE 1-Barclays buys ING Direct UK in retail banking push

By Anjuli Davies

LONDON, Oct 9 (Reuters) - Barclays PLC will buy the deposits, mortgages and business assets of ING Direct UK, as it looks to expand its retail operations and minimise exposure to a shrinking investment banking market.

ING said the move followed an announced strategic review of its UK business in August aimed at sharpening the focus of the bank and will see approximately 750 employees, 1.5 million customers and assets totaling more than 16 billion pounds ($25.64 billion) transfer to Barclays.

The Dutch bank and insurance group will take a 320 million loss on the transaction after tax.

The transaction will release around 330 million euros of capital for ING, which is in the process of divesting its insurance operations and certain other assets in an effort to repay Dutch state aid received in 2008, and moves to increase its capital level.

"The acquisition of ING Direct UK is a good fit with Barclays existing UK retail banking business," Ashok Vaswani, Chief Executive of Barclays UK Retail and Business Banking said in a statement.

Terms of the transaction were not disclosed but is expected to be accretive to return on equity immediately and the impact on Core Tier 1 capital is not material.

Completion is subject to regulatory approval and is expected to finalise in the second quarter of 2013.

Barclays shares closed at 222.4 pence on Monday, ING shares closed at 6.47 euros.

($1 = 0.6240 British pounds)

(Reporting By Anjuli Davies, additional reporting by Gilbert Kreijger, editing by Sinead Cruise)

((anjuli.davies@thomsonreuters.com; +44 207 542 6670;))