An ING Direct café in Toronto: Scotiabank acquired ING Bank of Canada last week. following the announcement that ING Bank of Canada will be acquired by Scotiabank on Wednesday, August 29, 2012. THE CANADIAN PRE SS/Michelle SiuMICHELLE SIU/The Canadian Press
ING Groep NV is plowing ahead with its plan to sell off assets and pay back some Dutch state loans issued back in 2008. A little more than two months after the company announced it was seeking new homes for ING Direct Canada and ING Direct UK, both units have been sold.
Barclays Plc, the second-largest bank in the U.K. by assets, said Tuesday that it would buy the U.K.-based ING business to shore up its retail capabilities, with head of U.K. retail and business banking, Ashok Vaswani, stating that it was a "good fit" in the press release.
Some suggest this could represent the next step in a change in direction for Barclays after the investment banking struggles caused by the London Interbank Offered Rate (Libor) probe earlier this summer. New Barclays chief executive officer, Antony Jenkins, was in charge of the company's retail banking group before the exit of Bob Diamond, and he already expressed his desire to make Barclays a "better bank" and to "become the 'go to' bank in the eyes of all of our customers and clients ..." at the firm's Global Financial Services Conference in September.
Bank of Nova Scotia, however, had different motivations for purchasing ING Direct. There was no scandal to distract from. Canada's third-biggest bank by assets used the acquisition to boost national deposits and balance out its international banking strength.
Unsurprisingly, there are some key differences between the two deals, and in what the new parent banks are adding to their portfolios.
ING arrived in Canada in 1997 – that's before countries like Australia and the U.S., and well before the U.K., which opened its doors in 2003. The Canadian business is now bigger with $30-billion in deposits, and another $30-billion in its loan group (with the majority of this amount stemming from mortgages). ING's smaller U.K. business is handing Barclays $17.1-billion in deposits and mortgage loans of $8.7-billion.
There are more employees at ING in Canada, with 1,100 people serving the bank's 1.8-million customers, and Scotiabank has committed to keeping these staff. In the U.K., ING currently employs 750 people to assist 1.5-million customers, and Barclays will only say it's "too soon" to comment on redundancies.
But perhaps the biggest difference between the two businesses comes down to the announced price paid for them.
Scotiabank agreed to buy ING Canada for $3.1-billion, with an net investment of $1.9-billion once a substantial amount of cash on the books was factored in. The Canadian ING was the first Direct business to become profitable back in 2001.
Barclays, on the other hand, did not give a purchase price for the U.K. ING, which is not currently profitable. Parent company ING Groep did say in a statement that the transaction would actually amount to an after-tax loss of $403-million (€320-million), but would release capital.
While the U.K. and Canadian deals are wrapping up, and Capital One Financial Corp. bought ING Direct USA for $9-billion back in February, there are still a few ING Groep-owned units clustered in the deal zone. The insurance and investing management groups in Asia, the U.S., and Europe, for example, are all expected to come up for grabs soon and sell for billions.