ING has reached an agreement to sell ING Direct UK to Barclays.
The transaction is part of ING’s ongoing evaluation of its portfolio of businesses and is in line with ING’s strategic objective to sharpen the focus of the bank.
Under the terms of the agreement, the GBP10.9bn (EUR13.4bn at current exchange rates) of savings deposits and GBP5.6bn of mortgages (EUR6.9bn) of ING Direct UK will be transferred to Barclays, which will eventually integrate these businesses in its UK retail and business banking division.
“ING Direct UK operated in a very competitive market over the past years and I am proud of the excellent customer experience our UK team has built, as proven by the customer satisfaction scores. In Barclays we have found a company who will continue to provide the excellent service our approximately 1.5 million ING Direct customers in the UK have grown accustomed to,” says Jan Hommen (pictured), chief executive of ING.
Launched in 2003, ING Direct UK is a direct banking platform which offers a focused range of savings and mortgages products to our customers in the UK through secure online and mobile internet channels, supported by call centres in Reading and Cardiff. Over the past years, ING Direct UK has received numerous awards for its products, customer service and employee engagement. At 31 August 2012 ING Direct UK had approximately 750 employees.
The ING Direct units in Australia, Austria, France, Germany, Italy and Spain are not affected. ING continues to invest to evolve the ING Direct business model, increasing the product offering and extending distribution, while integrating the balance sheet with the rest of ING Bank. The ING Commercial Banking activities in the UK are also not affected by the transaction.
The transfer of ING Direct UK’s savings deposits and mortgages to Barclays will be executed by way of a court approved banking business transfer pursuant to Part VII of the UK Financial Services and Markets Act 2000. The transfer is expected to result in an after tax loss of approximately EUR260m.
ING Bank will retain part of the UK investment portfolio of EUR9bn as per 31 August 2012 as part of ING Bank’s total investment portfolio. Another part of the UK investment portfolio will mature or be liquidated in the coming months to facilitate the transaction which is expected to result in an after tax loss of approximately EUR60m to be reported in the fourth quarter of 2012.
The combined loss for the transfer of the business and the investment portfolio will be offset by an expected total capital release of approximately EUR330m due to risk weighted assets release. The total transaction will therefore be capital neutral to ING Bank’s core Tier 1 ratio.