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Winnipeg Free Press - PRINT EDITION

Scotiabank poised to grab ING

Would still operate as distinct brand

By: Sunny Freeman

Posted: 08/30/2012 1:00 AM | Comments: 0

TORONTO -- Scotiabank plans to scoop up ING Bank of Canada from its Dutch parent company in a $3.13-billion deal that will give the country's most international bank a stronger foothold in domestic consumer banking.

ING Direct would continue to operate separately and maintain its 1,000 employees under the deal announced Wednesday.

And it will keep the same branding -- popularized in ads set against its orange lion logo in which viewers are exhorted to "save your money" -- for at least 14 months after the deal closes. But the name will change within 18 months.

Scotiabank said the deal -- one of its largest acquisitions ever -- to buy the no-fee online banker, with a book value of about $1.7 billion, $40 billion in assets and about $3 billion in deposits, will add "modestly" to its earnings within the first year.

"ING will now benefit from a strong stable Canadian owner who will provide additional resources to continue to expand and to grow," Scotiabank president and CEO Rick Waugh said on a conference call with analysts held just after the deal was announced.

"For Scotiabank, this will provide us with a new source of incremental earnings beginning in the first year as well as $30 billion in retail deposits of 1.8 million customers to further diversify our funding."

Waugh added ING's portfolio will help Scotia solidify its No. 3 position in the Canadian deposit space. ING -- Canada's eighth-largest bank -- also has a $30-billion loan portfolio, mostly in residential mortgages.

Scotiabank has recently been making a series of international acquisitions as it diversifies its revenue base away from a seemingly tapped-out Canadian market.

But Anatol von Hahn, Scotia's group head of Canadian banking, said the opportunity fit its strategic focus on growth in deposits, payments and wealth management.

"This is a strategic decision, an opportunity that arose to fit in with what we already do on a day-to-day basis with our customers, and this just augments that."

ING Direct president and CEO Peter Aceto said ING -- which has no physical branches -- would continue to operate under its current no-frills banking model and as a separate entity from Scotia.

"For our customers, we expect no change... we will continue to offer our customers the highly competitive and attractively priced products that we have become known for, and we will be continuing our efforts to earn more customers with our focus on Canadians who are self-directed."

However, he said the deal will provide opportunities for growth, both in terms of products and geographical footprint, suggesting credit cards are one potential new product in the pipeline.

"There are a lot of Canadians who are looking for other things from us on the payment side and a variety of other opportunities."

Parent company ING Groep NV, which has been struggling to keep its balance sheet healthy amid bad loans and declining margins, announced earlier this summer it was putting its Canadian division under review for a potential sale.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition August 30, 2012 B3

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