Bank of Nova Scotia to buy ING Direct Canada for $3.14 bn

Bank of Nova Scotia (Scotiabank) yesterday agreed to buy Dutch lender ING Groep's Canadian online bank ING Direct Canada, for C$3.1 billion ($3.14 billion) in cash, the biggest acquisition by the Canadian lender in its 180-year history.

The Toronto-based bank said that it will pay the Netherlands-based parent ING Group $3.126 billion, which is expected to result in a net investment by Scotiabank of approximately $1.9 billion after deducting the excess capital currently at ING Direct.

Scotiabank will issue 29 million shares at C$52 each in order to raise C$1.5 billion to help fund the deal.

With approximately $40 billion in assets, $30 billion in deposits, 1.8 million customers, and over 1,100 employees, ING Direct is the eighth-largest bank in Canada.

Started in 1997, ING Direct Canada has no physical branches but is a direct bank that serves customers online, via contact centres and mobile devices, offering cheap loans and high-interest savings accounts.

The lender has a strong mortgage portfolio with 59 per cent of mortgages insured and an average loan-to-value ratio on uninsured mortgages of 53 per cent.