Toronto-based Scotiabank announced today that it has reached a definitive agreement to purchase ING Direct of Canada from its Netherlands-based parent ING Group for 3.126 billion Candian dollars in cash. The deal is expected to result in a net investment by Scotiabank of approximately $1.9 billion Canadian after deducting the excess capital currently at ING Direct.
Scotiabank is also announcing a public offering of 29 million common shares at $52 on a bought deal basis for gross proceeds of $1.5 billion to fund the acquisition.
With approximately $40 billion in assets, ING Direct is the 8th largest bank in Canada. It is a direct bank that serves customers online, via contact centers and mobile devices, offering savings, checking, mortgages and four mutual funds. It has five ING Direct Cafés in the country and no physical branches.
The deal is subject to regulatory approvals and closing conditions, and is expected to close by December 2012.
Scotiabank said it does not plan an immediate change to the name or branding of ING.
"ING Direct has had proven success in meeting the needs of those Canadians who are not looking for the added services, advice and relationships provided by traditional banking channels. We recognize that success and are committed to keeping this unique platform," said Rick Waugh, President and CEO of Scotiabank, in a statement.