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“ING Direct will continue to operate separately and customers will continue to interact the way they do now,” Anatol von Hahn, Group Head of Canadian Banking at Scotiabank, said on a conference call with reporters.
But ING Canada president Peter Aceto said he’s not anticipating any customer backlash.
“I think Canadians came to ING Direct because of what we do not because they don’t like something. Over the years we’ve earned their trust and support. They’re willing to get the great value and service and because they’re doing things on their own.
The deal is expected to result in a net investment by Scotiabank of $ 1.9 billion, after deducting the excess capital currently at ING Direct.
The deal is subject to regulatory approval.
“ING Direct has had proven success in meeting the needs of those Canadians who are not looking for the added services, advice and relationships provided by traditional banking channels. We recognize that success and are committed to keeping this unique platform,” said Rick Waugh, President and chief executive officer of Scotiabank.
“ING Direct will benefit from the backing of a strong, stable Canadian shareholder with the additional resources to enable it to expand and grow. This in turn will provide our shareholders with a new source of incremental earnings beginning in year one, and a new deposit base to further diversify our funding,” Waugh added.
ING Direct has a strong mortgage portfolio with 59 per cent of mortgages insured and an average loan-to-value ratio on uninsured mortgages of 53 per cent. Credit quality is high with provisions for credit losses below 0.02 per cent.
“Scotiabank is committed to preserving what ING Direct’s customers have come to love about it,” said Anatol von Hahn, Group Head of Canadian Banking at Scotiabank. “ING Direct will continue to operate separately and customers will be able to interact the way they do now using their existing account numbers and passwords, served by the same familiar team.”
Like many of Europe’s banks, ING has had to divest assets and lean on emergency funds as anxiety over the Greek debt crisis took a toll on confidence in the continent’s financial institutions, which had already been battered by the recession.
In February, ING sold ING Direct in the U.S. to Capital One for 489 million euros.
In 2010, ING Group unloaded 400 Canadian industrial properties at a $ 1.3-billion discount to Alberta Investment Management Corp. and KingSett Capital after the European financial giant saw the portfolio’s value crash since it was acquired four years ago.