BNS buys ING, 8th largest Canadian Bank for $3.1 Billion
The Bank of Nova Scotia (BNS) announced on Aug 30th, their buyout of ING for $3.1 Billion. This would make Scotia the 2nd largest bank in Canada behind RBC. The deal is not official yet as it is still subject to regulatory approval but is likely to complete by December this year.This purchase may have large implications in the mortgage industry as Scotia is sending mixed messages about their intentions with the ING channel. Although Scotia is “committed to keeping this unique platform”, they are also planning on scrapping the ING name within 18 months and re-branding the company. What this means with regards to their product offerings will be interesting to see, but we did get a few hints:1. BNS hinted that as ING mortgages mature, they intend to reallocate some of that capital to higher margin business.
2. Their mortgage focus will be “predominately in the retail business because that’s where the day-to-day relationship is with the customers.”
3. A Scotiabank spokesperson said: “Approximately half of ING’s mortgage book was built by purchasing third party mortgages where there is no customer relationship. This business will be allowed to reduce over time…We will, in due course, work with the management team at ING to consider the value of these channels and the degree to which they support ING Direct’s unique value proposition.”
It sounds like, one way or another, ING will be attempting to get more business through their retail outlets in an attempt to cross-sell clients on higher margin business, ie credit cards, personal loans, vehicle loans, insurance, etc. Currently well over 50% of all mortgages on ING’s books were sourced by mortgage brokers.
But will ING customers have an issue with these changes? ING’s customers have the highest average net worth of all the major banks in Canada, as they just wants the best rates – they don’t need as much advice on their investments. We may see a need for another strong online-presence lender if Scotia has its way.
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