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ING to Sell Online Bank ING Direct By 2013

This article was written by in Banking. 20 comments.


Update: Capital One has purchased ING Direct.

Here in the Untied States, ING Direct, a banking arm of the large financial company ING Group from the Netherlands, offers more than just high-yield online savings accounts. The bank also offers investments and mortgages, and some of the latter may have been too risky, like those sold and packaged into securities by domestic banks.

ING Group received a taxpayer bailout of €10 billion ($14.9 billion) and the European Commission is forcing the financial company to restructure in order to repay this loan. Part of this deal involves taking ING’s insurance companies public and selling the United States’ ING Direct by 2013.

The effect of this sale remains to be seen. Some time between today and the end of 2013, ING Direct will be owned by another company. This bank was one of the first to operate without any brick-and-mortar branches and the first to be an unmitigated success. When I first started paying attention to my finances at the start of this decade, the recommendations for ING Direct flowed from every information channel. With the highest interest rates in the savings account business, unusually capable customer service, and a slick and functional website, the bank was a favorite among the die-hard personal finance fans at the Motley Fool discussion boards.

More recently, ING Direct has moved from excellent to very good. I still recommend this bank to people who want a hassle-free experience, but their rates are no longer as competitive and their electronic checking account is not the best in class. For those with more money to put in savings, those who would benefit from a higher interest rate, I usually offer additional options.

ING Direct’s corporate message in response to those customers concerned about recent news of the impending sale is that your money is safe. I don’t think safety is the real concern. Accounts at the bank are insured by the FDIC, so even if the bank fails safety isn’t a problem. These are the questions you should have right now:

  • Who will purchase the bank and will ING Direct’s core values change?
  • If the core values change, will they be for the better (more competitive interest rates, for example) or for the worse (scaled back operations and customer service, for example)?
  • What new account fees will be introduced?
  • ING Direct employs about 1,200 in Delaware and another thousand more across the country. Will they have jobs and for how long?

These questions will not be answered for some time.

I do not see the announcement of this sale as a reason to move money out of ING Direct now. I will be watching developments closely, however. With the bulk of my savings in ING Direct, I am very sensitive to the fact that they do not offer the highest interest rate available. For years, the bank has counted on customers like me: those who first deposited when the interest rates were high and competitive and who have stayed around as other banks consistently offer higher rates. But I do not owe my loyalty to a company and will be quick to shop around if I am no longer getting a good deal considering cost, return, and service.

Photo credit: diaper
ING to sell Delaware-based bank in [sic] 2013, Eric Ruth, The News Journal, October 27, 2009
Post-Bailout Blues as Europe Orders ING Group to Sell 2 Units, Eric Dash, New York Times, October 26, 2009

Updated August 16, 2013 and originally published October 28, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 20 comments… read them below or add one }

avatar Ian P

I switched to ING last year after Wamu got bought by Chase. My local WaMu branch had a great staff, but things changed when they went to Chase. I hope Chase doesn’t buy ING. The WaMu to Chase transition is a good example of one company focused on customer service being bought out by another company focused on fees.

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avatar Joshua

How sad…I really loved that bank.

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avatar Ross

Ohhhh crap… they were literally the best customer service department I have ever dealt with in any industry. And the website is up there too. The lack of overdraft fees is what seals the deal for me. The day that goes away, I’m off to a better rate as well.

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avatar Derek

“ING Group received a taxpayer bailout of €10 million ($14.9 billion) and the…”

Has the dollar fallen that much?

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avatar Luke Landes ♦127,380 (Platinum)

I *always* do that. I’ve corrected the post.

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avatar jrguar

Actually that was part of the deal… a 50% premium was the cost of the bailout. I would love to get that kind of return on my investments.

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avatar BobBobBob

I really love their automated billing…I hope someone good buys them. I’ll leave if I need to, but I hope I won’t have to.

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avatar Evan

Flexo,

I bet the interest rates would rise, only because the purchaser would fear the mass exodous of cash (a la WaMu). That being said, I don’t understand the sale of this arm of their business – what is ING going to keep just their brokerage arm?

What will ING be made of without their direct banking? It seems like it be the equivilent of Merck selling their pharma arm?

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avatar Miguel

Evan, ING is a “little” bit more than the ING direct in the US. In fact it is the eighth-largest company in the world… so I guess they will be made of a lot of things if they do sell their operations in the US.
And Flexo, I know the dollar has been losing its compared to euro, but €10 million its still a little bit less than $14.9 billion… :)

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avatar Evan

Sorry Miguel I should have been clearer – I meant what are they going to be in the US Not worldwide.

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avatar Tom Dziubek

Geez, first Aaron Patzer with Mint and now possibly Jim Kelly from ING Direct. Pretty soon, no one’s going to want to be interviewed by us anymore. We’re becoming the Madden Curse of personal finance podcasts. LOL

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avatar Eric

LOL @ Tom. Stop interviewing these people! Curse!

And please keep us updated Flexo. I love ING but if new management isn’t up to par, I have no qualms moving.

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avatar Tom Dziubek

If Greg Grunberg’s character ever gets killed off on Heroes, you’ll know who to blame.

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avatar ctreit

Some of my savings are at ING Direct. But I am not worried about the changes that may come in 2013, at least not yet. I will cross that bridge when I get there. There are a bunch of internet banks out there. Maybe I will have deserted ING on my own by the time this deal goes through.

Aside from the consequences for my personal savings, I think this request from the Dutch government is great. We should do the same. We have too many banks that are too big too fail. We made some of our banks even bigger. Now we have fewer banks that are too big to fail, but they are way too big to fail now. How much sense does that make?

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avatar harm

I don’t know how much of an “unmitigated success” ING has been, if they required a bailout… maybe Netbank would still be around if someone had given THEM 14 Bil.

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avatar harry

Ing Group got the bail out not Ing Direct U.S.

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avatar David C

Well, as of December 2010 it appears that ING is fighting in an European court to hold onto ING DIrect. Not sure how that will work out… stay tuned…

http://www.reuters.com/article/idUSLDE6B01LW20101201

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avatar The Latter-day Saver ♦706 (Dime)

I wonder what effect this sale will have on Sharebuilder. I REALLY like having my brokerage and Roth IRA accounts linked to my savings and checking accounts.

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avatar Norma

Hi Luke,
Do you know what will happen with ING Direct Canada? Is there a risk that gets also aqcuired by Capital One or another large bank?
Thanks,

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avatar Thomas Munn

Just did some research. Looks like ALL of ingdirect is gone now as a result of ING borrowing 10 billion from the dutch government. The government required them to divest ALL ing direct properties, including usa, UK, and Canada.

Thomas

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