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August 2, 2012updated 04 Apr 2017 1:05pm

ING Direct eyes sale of UK, Canada units

ING has announced that the future of its ING Direct operations in the UK and Canada is under review. ING Direct Canada has posted an accumulated profit before tax of 603m ($740m) in the period from 2005 to the end of 2011.

By Douglas Blakey

ING has announced that the future of its ING Direct operations in the UK and Canada is under review.

ING Direct has enjoyed contrasting success in Canada and the UK.

ING Direct Canada has posted an accumulated profit before tax of €603m ($740m) 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).

In the UK by contrast, business success has eluded ING Direct.

The UK unit of ING Direct has accumulated losses of €321m since setting up shop in 2003.

In that period, it has only posted a profit in two years (2006 and 2009).

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

ING told RBI:

“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).

Funds entrusted at ING Direct fell by 7.3% to €13.9bn at the end of 2011 from €15.0bn at the end of 2010; at their peak, customer numbers remained flat at 1.45m.

Average balances per UK savings client have continued to decline sharply, down to just under €10,000 in the fourth quarter of 2011, from €20,000 in the fourth quarter of 2007. At the end of 2006, the average UK customer balance was €38,000.

ING said that the future of its direct banking units in Australia, Austria, France, Germany, Italy and Spain were not under review.

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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