(Recasts, adds details, ING and ABA comments, background)

By John Poirier

WASHINGTON, Sept 28 (Reuters) - U.S. bank regulators shut NetBank Inc NTBK.PK on Friday but said the Internet bank with $4.8 billion in deposits and assets remaining would reopen with online rival ING Bank taking over most of its operations.

NetBank had suffered large losses in 2006 due to defaults on loans, many of them mortgages, a government official familiar with the matter said.

The Federal Deposit Insurance Corp said customers of the failed Alpharetta, Georgia-based bank, which did not have any physical branches, can access their money over the weekend by writing checks and using teller machines or debit cards.

All NetBank customers' insured deposits were transferred to ING Bank, owned by Dutch bank ING Groep NV (ING.AS: Quote, Profile, Research).

ING agreed to pay a premium and take control of $1.5 billion of NetBank's insured non-brokered deposits and buy $724 million of liquid assets, the FDIC said.

The last time an Internet bank failed was in March 2002 when NextBank NA, which was based in Phoenix, Arizona, folded with $700 million in assets.

NetBank was the largest bank to fail since 1993 when Western FSB of Marina Del Ray, California collapsed with $3.8 billion in assets.