Ing direct Canada being sold | Page 2 | Tangerine Bank | Discussion forum

Some of you are likely wondering my thoughts on this. I held off before "weighing in", in part due to being busy at work and now that I am on vacation for a couple weeks, have the time to comment, but also to digest the news.

First, looks like my suspicion (and the suspicions of the news media and personal finance blogger/"amateur pundit class") were correct (although our primary suspicion that it be National Bank was still true, at least in part, they were confirmed to be the other bidder in the final round but it appears they were simply outbid by the deeper-pocketed Scotiabank).

Primarily, I think it's a good move on the part of Scotiabank to grow deposits and number of customers and make them a solid #3 in overall Canadian deposit & mortgage market share (after, presumably, RBC and TD, although I believe I read somewhere Scotiabank is # 2 in mortgages after only RBC, among the "Big Five"). I am pleased, and very much suspected, that ING Direct (hereinafter referred to as "NewBank") will be rebranded in 18 months time after transaction closing, likely by the end of October or November this year (at the latest, although I think it will be sooner, possibly by a few months to allow for a sort-of "transition branding" i.e. "NewBank formerly known as ING Direct"). To prevent a mass exodus of customers from NewBank fearing fees and "big bank oligopolies", and also to keep Scotiabank customers happy and not switching "en masse" to NewBank to save on fees, Scotiabank would be smart to (and I think they will) make the branding not include part of the Scotiabank name or colours in their branding, to keep it a distinct brand akin to Koodo Mobile or Fido, which many people don't know are owned by Telus and Rogers, respectively. They could keep the orange colour scheme – or adopt something new, like purple, as hinted humorously (perhaps not so humorously and more truthfully!) in a blog post by ING Direct CEO Peter Aceto.

As for possible names, I initially thought "Scotia Direct", but with Scotiabank Group Head of Canadian Banking Anatol van Hahn's and Aceto's comments in the media about keeping a distinct brand and keeping it totally separate, I now think this is a remote possibility. If retaining the "orange" colour scheme, why not simply either Orange or Orange Bank of Canada? That's another question, will Scotiabank be keeping a separate chartered bank subsidiary or simply make it a "division" or "product" of The Bank of Nova Scotia? I think, at least for several years, they will keep it a separate chartered bank subsidiary with its own institution number but could see it transition to a "division" down the read, with the same (or similar) product features. At a minimum, at closing, they'll change from a Schedule II (foreign-owned) to a Schedule I (Canadian owned) chartered bank under the Bank Act and as regulated by OSFI.

Scotiabank will also keep the practice of having no monthly fee with the THRiVE Chequing product – and I think the THRiVE Chequing name will remain and could even see it expanded to be used as the actual branding name of the subsidiary, possibly THRiVE Direct – but could see some minor "tweaking" around the edges (i.e., higher NSF cheque fee, slightly lower GIC rates but still higher than the "Big Five", potentially a small fee or instituting of a debit interest rate for WHOOPS! overdraft protection, etc.)

They will also launch a competitive, no-fee Visa or MasterCard product, potentially a MasterCard, making Scotiabank the fourth major "Big Six" bank to become a dual-credit card issuer in Canada.

Finally, I think, after 18 months from closing (if not before), we could see Scotiabank allow NewBank to use Scotiabank ATMs to make deposits, withdrawals, pay bills, change their PIN, etc., given van Hahn's and Aceto's public comments, ditching The Exchange Network. I think they will offer one or the other (not both) and given Scotiabank likely won't want to remain an Exchange Network member, as that would add pressure on the main Scotiabank to become a member and thereby potentially add a significant "burden" to their own ATM network of Exchange Network customers from other FIs using their ATMs, it's more likely NewBank will be "linked up" with Scotiabank's ATM network than The Exchange. Don't expect in-branch access at Scotiabank, though, that will remain "off limits" as they will keep them very much separate (much like CIBC does with PC Financial with Loblaw)!

So, those are my comments.

Cheers,
Doug

As I cross-posted here, a little more from me on this topic and then I'll be done before I sound like I'm "beating a dead horse".

I think what you'll see in terms of Scotiabank buying ING Direct's Canadian assets & RBC buying Ally's Canadian assets (and the Financial Post's Theresa Tedesco is right on the money [no pun intended] on this point) is Scotiabank needing them to "bulk up" on deposits to boost their capital adequacy ratios whereas RBC took Ally's Canadian assets solely for the huge consumer auto and dealer floor plan financing to essentially became a leader in a new business line and were quite likely forced to take Ally's ResMor Trust Company deposit business (i.e., sort of like saying, "I'll sell you my yacht but you have to take this little aluminium fishing boat that goes with it.") and that's why you're seeing the very quick winding down of the small deposit business to get it over quickly as it was very likely a money losing operation. I feel for the call centre employees, most of whom have already likely received some sort of notice of severance or will in the future.

We've seen RBC's plans unfold and, down the road in the months ahead, is GICs will gradually be rolled over into RBC issued GICs using the RBC platform but they may retain the ResMor Trust Company entity for CDIC purposes or they may decide to liquidate it entirely and close it up to save on CDIC membership dues & deposit insurance premiums. In terms of Scotiabank buying ING Direct's Canadian assets, you'll see potential future plans for ING Direct Canada rebranded as something like Scotia Direct, Scotia Money, RED Bank or some other name now that ING Direct USA has been rebranded as Capital One 360, a sort of "direct banking" operation with the tagline/slogan, "the national bank of wherever," that is a separate unit of Capital One Bank which has some branches. Scotiabank may tweak the ING Direct Canadian products around the edges, possibly allowing ING Direct Canadian customers to have full-access to Scotiabank's ATM network instead of The EXCHANGE ATM Network to save on costs & so forth but, if they do that, they will disconnect from The EXCHANGE ATM Network as they will not want the extra burden of having to process other FIs deposits and bill payments at what would then be the largest Exchange ATM Network member in Scotiabank. They'll most likely launch a no-fee and/or low fee credit card, probably a Visa card and not the hoped for MasterCard, now that they've partnered with American Express to give them dual issuer status. They'll probably expand the line of credit/overdraft offering, may institute a nominal fee for WHOOPS! protection and likely expand/enhance the Mutual Funds product portfolio. In short, like RBC needing to grow consumer auto financing, Scotiabank needs to organically grow this multi-channel deposit business.

Cheers,
Doug

Nope, I work in banking but do not work for Scotiabank and have no "inside" knowledge of this. I'm just basing it on past history when acquisitions are integrated and my vast investment knowledge.

Cheers,
Doug