The Dutch securities regulator has asked the public prosecutor to probe alleged insider trading by staff at ING Bank, amid concerns about possible governance failings at the financial services group.

The development comes against a background of a wider probe of the company's governance that was launched several months ago by the Authority for Financial Markets, the Dutch stock market regulator.

AFM is seeking to determine if there is evidence that the current case and recent unrelated affairs involving ING's domestic units, including errors in the information provided to clients at Nationale Nederlanden, its Dutch insurance business, might indicate ineffective governance.

The case filed with the public prosecutor is understood to involve between five and 10 ING Bank staff suspected of insider trading - for both personal gain and the benefit of clients - in relation to a perpetual subordinated bond marketed to Dutch and Belgian retail customers last year, according to people familiar with the matter.

ING conducted its own inquiry into the affair, which it voluntarily reported to AFM in December 2004, and which resulted earlier this year in it reprimanding 20 staff. However, while staff had breached internal protocol and embargoes, there was no evidence of insider trading, ING said.

AFM has uncovered new information prompting "serious concerns", according to the people following events. The regulator confirmed only however that it was conducting an "on-going and far-reaching investigation into the governance of ING group", but declined to say anything about the insider trading case or any other matter relating to the inquiry.

ING said it had received no notification of justice department involvement and was satisfied it had itself dealt effectively with the matter. It understood the governance investigation was more of a "business review" by AFM which wanted to investigate reporting lines between ING group and its Dutch units.

However people close to the matter described the AFM inquiry as "the most significant of its type ever conducted" by the authority.