The asset, branded as ING Direct
Canada, will bring 1.8 million customers, C$40 billion in assets and C$30
billion in deposits under the wing of Canada's No. 3 bank.
Scotiabank also said it would issue
29 million shares at C$52 each for total proceeds of C$1.5 billion to help fund
the deal. It said it would operate ING Direct as a separate entity.
Amsterdam-based ING put the unit up
for sale earlier this month as part of a series of planned asset divestments to
raise funds to repay a Dutch government bailout from the 2008 financial crisis.
Scotiabank Chief Executive Rick
Waugh said in a statement the transaction would be accretive to the bank's
earnings in the first year after the deal is finalized.
"ING Direct will benefit from
the backing of a strong stable Canadian shareholder with the additional
resources to enable it to expand and grow," he said.
Scotiabank said its actual net cost
will be C$1.9 billion after deducting the excess capital levels currently at
ING Direct.
Scotiabank also said its Basel III
common equity tier 1 ratio will remain within its targeted range of 7 to 7.5
percent through the first quarter of 2013, meeting new standards that begin to
take effect next year.
Started in 1997, ING Direct Canada
is an online bank which offers cheap loans and high-interest savings accounts.
Touted by familiar ads where Dutch
actor Frederik De Groot encourages Canadians to "save your money," it
currently holds about 3 percent of the Canadian market.
Canada's banking industry is
dominated by six domestic lenders, who are not permitted to merge with each
other, which makes domestic growth opportunities few and far between, and has
forced them to look to international markets for growth.
While the domestic bank industry has
been hurt by slowing loan growth and narrow interest margins, it still churns
out steady profits for the banks, underpinned by Canada's relatively strong
economy and a housing market that continues to chug along, despite fears of a
pullback.
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