ING to sell ING Direct Canada to Scotiabank
ING announced today that it has reached an agreement to sell ING Direct Canada for a total consideration of CAD 3.1 billion (EUR 2.5 billion at current exchange rates) to Scotiabank, a leading Canadian financial services company. The transaction is a result of ING’s continuous evaluation of its portfolio of businesses and is in line with ING’s strategic objectives of sharpening the focus of the bank and further strengthening its capital position.
“Over the past 15 years we have successfully built ING Direct into the leading direct bank in Canada. I am very pleased that in Scotiabank we have found a complementary owner with the ambition to further grow the business, which is a testament to the quality of our local management and employees as well as to the strength and potential of the business model,” said Jan Hommen, CEO of ING Group. “Scotiabank’s straightforward business model combined with the innovative and successful ING Direct model make an ideal combination for a strong future and a solid base for both our customers and employees.”
Since its launch in April 1997, ING Direct Canada has built its business by providing customers excellent service and a simple, transparent product offering of savings, chequing, mutual fund and mortgage products through call centres, the internet and ING Direct cafés. With over 1100 employees serving 1.8 million clients, ING Direct has a proven track record of putting its customers’ needs first. ING Direct Canada is profitable with a strong capital position and approximately CAD 40 billion in assets.
The ING Direct units in Australia, Austria, France, Germany, Italy and Spain are not affected by today’s announcement. ING continues to invest to evolve the ING Direct business model, increasing the product offering and extending distribution, while integrating the balance sheet with the rest of ING Bank. On 2 August, ING announced that it was reviewing options for ING Direct UK. This review is ongoing, and any further announcement will be made if and when appropriate.
Under the terms of the sale agreement, Scotiabank will pay CAD 3.1 billion in cash for all of the shares in ING Bank of Canada, which is the formal name of ING Direct Canada. Earnings of ING Direct Canada until closing of the transaction will be for the benefit of Scotiabank. In addition to this, Scotiabank will assume the responsibility to redeem on the first call date after closing of the sale transaction a locally issued lower tier 2 bond (ISIN CA 456847AA01) with a total outstanding amount of CAD 321 million, which carries a guarantee from ING Bank N.V..
The sale of ING Direct Canada is expected to lead to a transaction gain of EUR 1.1 billion after tax and a capital release of EUR 1.4 billion at closing for ING. The transaction is expected to further strengthen ING Bank’s capital position, leading to a pro-forma core Tier 1 ratio of 11.6% based on ING Bank’s core Tier 1 ratio of 11.1% at 30 June 2012 and current exchange rates.
Scotiabank is Canada’s most international bank and one of North America’s premier financial institutions. More than 81,000 employees serve the diverse needs of over 19 million customers in more than 55 countries around the world. Scotiabank offers a broad range of products and services including personal, commercial, corporate and investment banking. With assets of CAD 670 billion (as at July 31, 2012), Scotiabank shares are traded on the Toronto and New York exchanges.
The sale of ING Direct Canada is subject to customary regulatory approvals and is expected to close in the fourth quarter of 2012.
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