ING forced to sell US Internet bank
26 October 2009 | 12684 views | 2
ING is to divest its successful Internet banking operation ING Direct in the US as part of an agreement with the European Commission on a mammoth restructuring plan to separate its banking and insurance activities worldwide.
Under the programme, the giant Dutch bank will sell off all of its insurance operations over the next four-years as part of an effort to repay a $10 billion bail-out by the Dutch state.
Announcing the plan, ING chief Jan Hommen says: "Widespread demand for greater simplicity, reliability and transparency has made a split the optimal course of action".
As part of the restructuring, the EC has insisted that the Dutch bank must sell its ING Direct franchise in the US.
ING says it regard the US operation as a "very strong franchise" that offers potential for growth. It is anticipated that a divestment will take several years and will not be completed before the end of 2013.
In a statement, the bank says: "This agreement has no impact on other countries. ING remains committed to the ING Direct franchise, as a strong contributor to ING's growth going forward. The unique customer proposition, simple transparent products and market-leading efficiency are at the heart of ING's banking strategy."
However, much of ING's success has been built on offering headline-leading interest rates for Internet-only savings. The new deal with the Dutch state specifically precludes ING from being a "price leader" in any EU country for certain retail and SME banking products. These restrictions will apply for the shorter period of three years or until the banks has repaid its debt burden.