The country’s #1 online bank brand, ING Direct Canada (ING), is apparently up for sale.
Its financially challenged Dutch parent, ING Groep NV, reportedly wants to divest of it to raise cash.
Officially, ING says it “may or may not” sell its Canadian operations. But the Globe reports that a deal could be announced by the fall, and could close as soon as year-end.
The Financial Post cites a source at Credit Suisse (CS) who speculates that Scotiabank or National Bank could be potential buyers. Other suitors might include a mega credit union looking to go national.
The CS analyst estimates that ING’s price tag could be north of $1.7 billion.
Chances are, any buyer would run ING as a separate operation, at least for a while. That would likely leave ING’s retail mortgage business unaffected for a period of time, perhaps with the exception of its pricing.
ING’s mortgage broker division is another question. This will put brokers a bit on edge as they wonder whether the new buyer will keeps ING’s broker offerings intact. If we were betting people—and we are—we’d wager that it would, since ING depends on brokers for a strong majority of its mortgages.
An ING contact said the company is not planning on making a statement to brokers. For the foreseeable future it is “business as usual.”
Ideally, a sale would also have no adverse effects on the company’s “unmortgage.” ING’s mortgages have some of the best features in the industry, with a 25% annual prepayment allowance, 120-day rate hold, great online access, skip a payment, discounted penalties, and great rate blend policy.
ING Direct Canada launched in 1997 and is Canada’s eighth largest bank by assets. It has 1,100 employees, $40 billion in assets and roughly 1.8 million clients. It earned about $117 million of profit last year, according to the Globe.
As of last year, ING reportedly held $31.5 billion in residential mortgages, a large portfolio for a bank its size. Most of its mortgages are insured.
Sidebar: Earlier this year, ING Groep NV disposed of its U.S. operation to Capital One for $9 billion.
Rob McLister, CMT
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