Scotiabank Acquires ING Direct for $3.126 Billion

Scotiabank acquired ING Direct for a whopping $3.126 billion.

The acquisition was a significant move for Scotiabank, marking a major expansion of its operations.

ING Direct was a subsidiary of the Dutch financial institution ING Group, but was sold off to focus on its core business.

The acquisition was completed in 2012, and ING Direct continued to operate under the Scotiabank umbrella.

Scotiabank acquired ING's online banking business and mortgage portfolio as part of the deal.

The mortgage portfolio is significant, with 59% of the mortgages insured and an average loan-to-value ratio on uninsured mortgages of 53%.

Scotiabank opened 29 million common shares at $52 to fund the acquisition, raising a total of $1,508,000,000.

Capital One bought ING Direct USA for $9 billion in a cash and stock deal.

The deal includes $6.2 billion in cash and $2.8 billion in Capital One shares, making ING the largest single shareholder in Capital One.

Capital One expects to save $90 million from consolidating systems and corporate staff functions after the deal closes.

The company also expects to save $200 million annually from consolidating management of the combined deposit portfolio.

The financial impact of Capital One buying ING Direct USA was significant. Capital One will finance the cash portion of the deal through a public equity raise of about $2 billion and debt offerings of about $3.7 billion.

The deal is expected to add to Capital One's earnings per share in 2012. Capital One also expects to save $90 million from consolidating systems and corporate staff functions, and another $200 million annually from consolidating management of the combined deposit portfolio.

Capital One will incur a charge of $210 million in acquisition costs when the deal closes late this year or in early 2012. The company's shares dipped 5 cents to $48.95 in extended trading following the announcement of the deal.

Here's a breakdown of the financial impact:

Scotiabank plans to keep ING as a distinct subsidiary, which means customers can expect the same products and experience.

ING DIRECT customers can rest assured that their banking experience will remain consistent, from their banking apps to their account login information.

The bank is committed to preserving what ING DIRECT's customers have come to love about it, according to Anatol von Hahn, Group Head of Canadian Banking at Scotiabank.

Customers will be able to interact with ING DIRECT the way they do now, using their existing account numbers and passwords, served by the same familiar team.

Scotiabank is keeping on 1,100 ING employees, contact centre network, and online access, ensuring a seamless transition for customers.

This commitment to continuity should provide a sense of relief and stability for ING DIRECT customers, who can continue to bank with the same level of service and familiarity.

Capital One bought ING Direct USA for $9 billion in a cash and stock deal. The acquisition is part of ING's restructuring plan filed with the European Commission in 2009.

ING will receive $6.2 billion in cash and $2.8 billion in the form of 55.9 million shares in Capital One. This transaction will help ING repay the amount it owes to the Dutch State in the context of the financial crisis.

The acquisition is expected to add to Capital One's earnings per share in 2012. Capital One will become the fifth largest depository institution and the leading direct bank in the US upon closing of the transaction.

Capital One expects to finance the cash portion of the consideration through a public equity raise of about $2 billion and debt offerings of about $3.7 billion. The company expects to incur a charge of $210 million in acquisition costs when the deal closes late this year or in early 2012.

Here's a breakdown of the deal: