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July 31, 2012updated 04 Apr 2017 1:05pm

ING set to put its UK unit out of its misery

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. INGs 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.

By Douglas Blakey

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.

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.

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