After months of ING Direct considering selling off its Canadian operations, the nation's No. 3 financial institution Scotiabank announced that it will acquire the online bank for $3.1 billion in cash.
What do ING Direct customers have to worry about after Wednesday’s acquisition by Scotiabank? Customers do not have anything to worry about, at least according to the company that held a press conference in Toronto.
Following the $3.1 billion purchase, ING Direct will continue to operate separately and will not affect the online institution’s roughly 1.8 million customers, who will now be under the wing of Canada’s No. 3 bank. Scotiabank noted in a news release that it will provide continuity for more than 1,100 employees.
In order to help fund the deal, Scotiabank will issue 29 million shares at $52 each for a total of $1.5 billion. It noted the real net cost would be $1.9 billion after removing the excess principal levels presently at the Amsterdam-based ING Direct.
Currently the eighth largest bank in Canada, ING Direct has approximately $40 billion in assets, $30 billion in deposits and has no physical branches. Customers access and manage their accounts online or through their mobile devices. It provides no-fee banking, including high-interest savings accounts and chequing accounts with interest on them. It has also begun offering mutual funds and mortgages.
“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 CEO of Scotiabank, in a news release.
“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.”
Customers have already taken to Twitter to show their dissatisfaction with the deal.
“Oh no! Closing my ING acct, I guess. "@knowltonthomas: Please, Scotiabank, do not ruin ING Direct Canada.”
“Gotta take my money out.”
“Oh great. @Scotiabank is buying ING Direct @SuperStarSaver. So they can ruin discount banking like like they ruined brokerage TradeFreedom.”