One might be forgiven for saying about time
too, but finally ING has announced that the future of its ING
Direct operations in the UK is under review.

ING’s rather more successful Canadian
operation is also said to be on the block.

Since setting up shop in the UK in 2003, ING
Direct has been one of the less well publicized banking
disappointments.

In the period from 2003 to the end of 2011, it
has accumulated losses of €321m ($398.3m) and only managed
to post any sort of a profit in two years (2006 and 2009).

It has changed its UK management more than
once and tinkered with its product range: all to no avail.

In August 2010, ING said that it was
repositioning its savings business to be profitable when the low
interest rate environment eased.

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By GlobalData

ING told me at that time: “We are successfully
attracting new savings customers in the UK to our low cost, simple
and high-quality service offering.

“We are currently investing in additional
products to develop a full service bank that will meet the
needs of our customers.”

Since then, ING Direct customer numbers have
actually fallen in the UK while a possible move into the
competitive current account sector never materialised.

In fiscal 2011, ING Direct UK posted a loss
before tax of €46m (2010: loss of €35m).

Customer deposits at ING Direct UK fell by
7.3% to €13.9bn at the end of 2011 from €15.0bn at the end of 2010;
customer numbers remained flat at 1.45m.

The really eye-watering drop is in average
balances per UK savings client: they have continued to plummet from
a high of €38,000 at the end of 2006 to under €10,000 in the first
quarter of this year.

ING has however ensured that there will be no
more negative headlines associated with its performance in the UK
in the reporting season, by discontinuing the practice of reporting
on a country-by-country basis for the ING Direct unit.

News of a possible sale will be a cause of
understandable concern for the 750-strong workforce of ING Direct
in the UK.

ING’s failure to turn a UK profit is no
reflection on their customer service levels.

As recently as this March, ING Direct UK
ranked top among UK banks for positive customer comments online,
according to the Web Listening Report from social media
research specialists DigitalMR.

The report concluded that ING Direct UK was
setting the benchmark for excellent customer service outperforming
traditional main high street banks for November.

ING kicked off 2011 with the sale of its
direct banking arm in the US to Capital One for €489m.

It remains in asset disposal mode while it
remains in hock to the Dutch government: it is still to repay €3bn
of bailout funds dating back to the banking crisis of 2008.

Attention will now turn to potential bidders
for UK unit. In a buyers market, ING may well be disappointed with
the level of bids.

By contrast with the UK, ING Direct Canada has
posted an accumulated profit before tax of €603m in the period from
2005 to the end of 2011.

In fiscal 2011, ING Direct Canada reported a
profit before tax of €110m (albeit a reduction of 20.8% from the
previous year).

ING Direct Canada ended 2011 with 1.8m
customers and funds entrusted of €21.6bn (up 5% year-on-year).

Profit before tax peaked at ING Direct Canada
in fiscal 2010 (€139m).

ING kicked off 2011 with the sale of its
direct banking arm in the US to Capital One for €489m.

ING is still to repay €3bn of state aid to the
Netherlands government having received a bailout following the
banking crisis of 2008.