To satisfy European regulators, ING Group, the Dutch former parent company of popular online bank ING Direct in the United States, is “reviewing strategic options” for its other online banking divisions, ING Direct Canada and ING Direct UK. Those “strategic options” could include a sale of those branches.
Earlier this year, Capital One completed its acquisition of ING Direct USA. Many ING Direct customers were concerned about the results of the acquisition. ING Direct is one of the best-rated online banks in terms of customer service, while Capital One’s reputation with customers in its credit card business was problematic. (Update: See this Review of Capital One 360, the new name for ING Direct.)
From my perspective, there hasn’t been any change in ING Direct’s operations since the acquisition. I don’t deal with customer service often, so perhaps there is something I’m missing, but it seems that ING Direct customers so far have not experienced any ill effects of new management.
Another warning before the acquisition related to fees; ING Direct is known for its no-fee operations, while Capital One is not. I am not aware of any new fees introduced for ING Direct bank account holders.
Banks have likely been eyeing ING’s direct banks since 2009, when the European Commission announced ING Group must sell ING Direct by 2013 to help repay bailout loans and taxpayer aid. Now that the sale of ING Direct USA ING Group is complete, the company is turning its attention to its other big online banking branches outside of its home country, ING Direct Canada and ING Direct UK.
ING Direct Canada has $30 billion in loans, almost all residential mortgages, and $30 billion in deposits (savings accounts and checking accounts). Analysts say the bank’s assets, liabilities, and distribution channels would be a good match for National Bank, Bank of Nova Scotia, and Toronto-Dominion (TD) Bank. ING Direct UK is somewhat smaller, worth only up to £240m compared to ING Direct Canada’s book value of up to $2.6b.
A sale’s effect on ING Direct customers depends on how the acquiring company wants to manage the online bank. In the short-term, Capital One has done well with its acquisition of ING Direct USA. It’s still unclear what the bank’s long term plans will be. If the Canadian and British branches of ING Direct are sold, the new owners certainly have the option of handling the acquisition differently. You could evaluate the acquirers’ past acquisitions to find a pattern, but that doesn’t always produce valid extrapolations. For example, Capital One has acquired banks in the past, and the bank’s strategy has been to integrate and re-brand, but that doesn’t seem to be the case so far with ING Direct USA.
When ING Direct USA’s sale to Capital One was announced, a good percentage of Consumerism Commentary visitors who opined about the sale wrote in to say they would be closing their ING Direct accounts in protest of the new ownership and decreased interest rates. Over the last few years, ING Direct’s savings account interest rates have fallen in comparison to other online banks. The sale provided a good incentive for customers to move their money elsewhere in search of better income from interest.
I opted not to chase rates and not to panic, preferring to wait and see before uprooting my personal money management plan. Customers in Canada and the United Kingdom, if happy with their experience with their respective branches of ING, might want to considering waiting even after acquisitions are announced.
ING is also shopping around its insurance business in Asia, hoping a buyer will assist ING in raising capital to satisfy the requirements of its bailout. For now, ING customers in other countries, such as the ING Direct customers in Australia, Austria, France, Germany, Italy and Spain, are not affected. The company has no plan to “review strategic options” in those countries, but a good business is constantly reviewing its strategy.
Without an address in Canada and the United Kingdom, I cannot open accounts at these banks to review their operations. Consumerism Commentary may not have a large percentage of readers outside the United States, but for those living in Canada and the UK, do you have experience with either of these banks? Do they match ING Direct USA in terms of reputation?
Updated February 8, 2013 and originally published August 3, 2012.