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Friday, April 19th, 2024

ING Direct Canada May be Sold- What will happen to Vancouver Home Mortgages Underwritten by ING?

ING Direct Canada May be Sold

According to some sources, ING Direct Canada (ING), the top ranking online bank brand in the country may be up for sale. The question for many people in British Columbia has become, what will happen to Vancouver home mortgages underwritten by ING?

This potential sale is not due to ING Canada’s struggles, but due to the financial predicament of its parent, Dutch company ING Groep NV. ING Groep NV apparently needs cash (and needs it fast); selling ING would be a way for it to generate the required funds.

In one of the company’s official statements it said that it, “may or may not”  selloff its operations in Canada.  But according to the Globe, the deal could be announced sooner than we think, and could be closed by the end of the year.

According to a source in Credit Suisse (CS),  potential buyers could include National Bank or Scotia Bank; though this is speculation. Other interested buyers might include a large credit union looking to leverage the size and scale of ING.

An analyst at CS has estimated that ING could be sold for over $1.7 billion.

It’s expected that a buyer would operate ING separate from their other operations, at least for a little while anyways. Such an action would leave the retail mortgage business of ING related to Vancouver home mortgages unaffected, though it’s pricing could still change.

But what will happen to the mortgage broker division of ING? Brokers are a little bit on edge as they wonder whether the new owner of ING will keep the company’s offerings for brokers intact. Though since ING relies on brokers for a large part of their mortgages, there is a good chance they will.

According to a contact within the company, there is no plan to make a statement to brokers. For the time being, it’s business as usual.

As it stands, mortgages from ING have some of the industry’s best features. These include a 120 day rate hold, discounted penalties, an excellent rate-blend policy and an annual prepayment allowance of 25%.

ING Direct Canada was founded in 1997. Since then it has been underwriting mortgages across the country including Vancouver home mortgages. When ranked by asset size, it’s currently the 8th largest bank in Canada. ING employs over 1,100 people, has approximately 1.8 million clients and holds about $40 billion in assets. According to the Globe, ING made approximately $117 million in the year 2011.  At the end of the prior year, ING held $31.5 billion in residential mortgages; for a Bank of its size this is a large portfolio. Most mortgages are insured.


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