ING Groep NV (NYSE:ING), the Dutch parent company of ING Direct USA, has agreed to sell its online bank to Capital One Financial Corp. (NYSE:COF)
The sale will be for $9 billion in cash and stock. This move helps Capital One move up from the 8th largest bank in the U.S., based on deposits, to the 5th largest depository bank. Capital One also becomes the largest direct bank with the acquisition.
Why sell ING Direct?
ING Direct is a successful division and a pioneer in online banking – why sell it? Back in 2008 ING Groep NV received a 10 billion Euro bailout from the Dutch government. As part of that loan, ING Groep NV is required to restructure and divest itself of ING Direct USA.
Not only will Capital One get ING Direct online banking, but they will also receive ShareBuilder, giving Capital One an investing arm for their customer base.
From Richard Fairbank, CEO of Capital One:
“The acquisition of ING Direct is a game-changing transaction that delivers attractive deal economics immediately and compelling long-term strategic value. The combination of Capital One and ING Direct creates a unique and valuable banking franchise that includes advantaged access to assets, great local scale branch banking in attractive markets, and with ING Direct, the leading direct bank customer franchise with national reach. Adding ING Direct enhances and sustains key sources of shareholder value over the long-term, including growth, returns and capital generation.”
What does this mean for ING Direct Online Banking?
I wouldn’t expect any changes in 2011 but we should see Capital One Integrating ING Direct USA into its own brands shortly after. This little tidbit from the ING press release seems to indicate the transformation:
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ING Direct USA will retain brand attributes such as the “orange ball”. ING will allow a one-year transitional use of the “ING Direct” trademark.
The parent company, ING, will still be working on developing their ING Direct brand in other countries around the world.
You know I love ING Direct. I have multiple accounts with them – Orange Savings, Electric Orange Checking, and Sharebuilder. Putting money away automatically in my ING Direct savings account was one of the first definitive steps I took to get my personal finances in order. I’ll definitely be sad to see ING Direct go.
I hope that Capital One really takes a close look at what makes ING Direct work and decides to keep their model. ING Direct is a great banking/investing product and they have awesome customer service. Capital One has a chance to become a premier, innovative bank if they want to.
Should you switch your ING bank account?
I would wait to see what comes of the transition first. We won’t see any major changes for a while. Either way, your banking money is still FDIC-protected, it’s safe. For the time being, this is just an ownership change.
My fingers are crossed that the new online bank and investing arm under Capital One can be stronger, but time will tell. Capital One says they will be able to save on costs with their synergy with ING Direct. Perhaps those saved costs will continue to pass onto customers?
One interesting aspect is that Capital One has a good number of physical bank locations, one thing that ING Direct USA didn’t (hence being an online bank). Now they are a brick and mortar bank with a strong online banking arm.
Keep an eye out to see if there are any account changes like additional fees or rate reductions that occur. But to be optimistic, keep an eye out for innovations as well. Let’s see if Capital One can take ING Direct USA to the next level.
Update 02/2013: Capital One has officially changed the ING Direct accounts to 360 Checking and 360 Savings (ShareBuilder keeps their name). I’m happy to say I haven’t seen any change in their service whatsoever. I still count the Electric Orange, now 360 Checking, as one of the best online checking accounts out there.
What do you think of ING Direct USA’s sale to Capital One? Will you move your account?
- Report: Capital One To Buy ING Direct For $9 Billion – The Consumerist;
- ING to sell ING Direct USA to Capital One | ING – http://www.ing.com/Our-Company/About-us/Article/ING-to-sell-ING-Direct-USA-to-Capital-One.htm;
- Capital One – Press Information – News Release – http://phx.corporate-ir.net/phoenix.zhtml?c=70667&p=irol-newsArticle&ID=1574883&highlight=