PayING Back The Dutch State
Netherlands-based lender ING 's decision to sell its Canadian business to Scotiabank did not require any 'Dutch courage'; rather it came under decree from the government. The US$3.1bn in cash raised from the transaction will be used towards repaying another chunk of ING's EUR10bn taxpayer bailout that it received from the government back in 2008. On the other side of the negotiating table Scotiabank will gain a unit that became a top-10 bank in Canada, with a customer base of 1.8mn and US$30bn in deposits. The unit is also sat on a pile of dry powder US$1.2bn high that it holds on its balance sheet above regulatory requirements. The unit also has a healthy mortgage loan book, with 59% of loans insured and with uninsured mortgages only covering around half the property's value. The Canadian bank plans to finance the deal in part by issuing 29mn shares at a price of US$52 a piece, raising around US$1.5bn in new equity. The asset disposal comes a year after ING agreed to spin-off its US-based ING Direct unit to Capital One Financial for US$9bn in what still stands as one of the largest banking M&A deals since the onset of the global financial crisis. The takeover is widely expected to close by the year-end, pending regulatory approval.