Barclays buys ING Direct, tries to shake off LIBOR scandal

Business banking news review: week ending 11 Oct 2012

One major personal and business bank account provider has purchased ING Direct UK, even as it struggles to get out from under the LIBOR price fixing scandal.

Barclays has entered into an agreement this week to buy out the UK branch of ING Direct. Subject to approval, the bank will take on its £5.6 billion mortgage book and its £10.9 billion in deposits come 2013.

As many as 1.5 million ING Direct UK customers will end up transitioning over to Barclays’ purview under the new deal as the retail division of the bank assimilates ING Direct. Barclays will also be transitioning 750 of ING Direct UK’s staff members from its Reading-based head office.

This isn’t the firs move on the part of the Dutch bank to bow out of retail markets. ING Direct fled the US markets earlier in 2012, selling off to Capital One, an American credit card firm, while the departure from UK markets is part of a repayment strategy for clearing its debts to the Dutch government, which handed ING Direct a bailout during the credit crisis in 2008.

The sale is a good deal for Barclays, considering how ING Direct is taking a loss on its mortgage book. The Dutch bank is dropping its mortgage assets by 3 per cent below value, taking a net loss of €260 million in order to repay the Dutch government.

ING Direct’s UK business has been relatively strong since it opened its doors, especially in the easy-access savings accounts markets. The bank used high bonus rates on its savings products in order to entice new customers to open accounts, relying on competitive interest rates to build the bulk of its customer base; likewise has ING Direct grown quite popular in Australia due to its willingness to pass on savings to its mortgage customers after the Reserve Bank cut interest rates by a significant margin.

Jan Hommen, chief executive for ING Direct, commented on the sale, praising the UK team for operating in a quite competitive market yet still providing high levels of customer service. Hopefully Barclays will feel the same about their 750 new staff and not make them all redundant!

© 2018 All rights reserved. Reproduction in whole or in part without permission is prohibited. See our copyright notice.

Tags: , , ,