Brokers fear lender's ultimate departure

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They may be jumping the gun, but some brokers are suggesting if ING Direct Canada is sold off, the buyer will move to take its extensive mortgage book into the branch and out of the channel.

“Count ING out. Within a yearthey’ll be sold,” Rob Campbell of Verico The Mortgage Wellness Group, told “What worries us is that the buyers will just mine ING’s client list for what it’s worth and leave the broker channel.”

That move would be not unlike CIBC’s and its decision to fold FirstLine at the same time transfer the mono-line's massive book to its branches in hopes of converting clients at renewal.

In the scenario Campbell lays out,  ING’s new owner would simply focus on transferring clients to ING's branch network or its own.

“That’s the easiest and cheapest way to go about it,” said the Guelph broker.

Last week, the Dutch-based parent of the bank announced it was “evaluating its options” as it continues to wiggle out of dire financial straits. Among those options are, the possible sale of its UK and Canadian operations.

Although ING is still in the hole for about three billion euros in bailout money from the Dutch government, the bank’s Canadian arm is considered a good buy, say analysts.

Since it began its Canadian operations in 1997, ING Direct has had phenomenal growth in high-ratio insured mortgages through the broker channel.

Now many brokers are worried that ING will be snapped up by one of Canada’s big five banks, which will simply add the lender’s mortgage book to its own.

If ING does go on the block it could be an indication that tougher times are ahead.

“Earlier we had FirstLine being pulled out by CIBC, now we have the potential loss of ING,” said Campbell. “The industry may be headed for a cycle of fewer lenders. We are in for a rough ride.”


  • Ken on 2012-08-09 2:47:33 AM

    What is funny about this is comments are made about ING or FLM having accounts flooded into a branch network. Any of you been in a bank branch lately ? Well - good luck with that to all our banking friends. The branches cannot keep up with their normal duties today, now they are going to cross sell ??? Hmmm !! The banks philosophy in order to keep up with the broker network is to higher "Mortgage Specialists" [funny word - specialist] so they do not loose market share !! How we do'in with that ol bank friends ? Not that good is what we are hearing ! Logically if you think of the # of FLM / ING customers, divide by the # of qualified individuals to solicit them across Canada and you are probably looking at many many years worth of work for these people with min results. I believe who ever has a mortgage with the 2 noted above, those clients will be on the hunt ASAP for a new mortgage and guess who they are going to call ?? Yep - the broker channel! Good Luck to ya !

  • Rob Campbell | on 2012-08-09 3:07:24 AM

    To clarify my comments here, I think ING has a fantastic approach to customer service. Their ability to provide many products to their clients, with the main focus being satisfaction and customer service, has them well ahead of their competition.

    My main message, which may not have come across clearly in this article, is that I believe they will continue on providing the same experience for their clients but will start to focus more on going directly to the consumer as opposed to through the Brokers.

    At the end of the day, I hope they stay with us as their employees (BDM's, Underwriters, etc) are all great people and very helpful, but part of me can't help but think an exit from the Broker Channel (not mortgages all together) is imminent as we just witnessed with FLM.

    Just wanted to share further thoughts as the article seemed a bit too doom and gloom.
    I welcome any feedback.

  • Paolo Di Petta | on 2012-08-09 4:02:24 AM

    I agree with Rob - ING has a great reputation, but changes in the market will ultimately start pushing them (and all sorts of lenders) out of the space. They've made their money on the upswing, and are now looking to offload their investment and minimize risk.

    The real estate market (at least here in Toronto) has hit it's peak and I anticipate a lot of institutional lenders will start selling off their books as a means of risk management. At the end of the day, they're a business like any other and they have a fiscal responsibility to their investors.

    The upside, of course, will mean an eventual increase in alternate lenders to pick up the slack. They will have different mandates, risk tolerances and thus, flexibility, which will allow them to participate in the next tier of the market.

    Isn't this just the natural cycle of our industry? I can't say I'm really surprised.

  • Ron Butler on 2012-08-09 5:40:56 AM

    I think that ING will be sold and their brand will cease to exist. I sincerely wish that was not true for the sake of all the really great people at that company. I really mean that because we need them as lender in our channel and the staff there is simply excellent.

    But I know that whichever bank buys ING will simply absorb the mortgages and eliminate the brand, it's the basic template of how all big banks buy smaller banks. It was different at Maple Trust but John Webster is one of the three people in Canada who could have pulled that off.

    So it's more bad news folks, but we mortgage brokers need to get used to bad news. We will all hear more bad news before we start to hear any good news again.

  • Gord McCallum on 2012-08-09 6:17:08 AM

    Here's the thing about the direct-to-consumer approach: It didn't allow ING to scale their lending portfolio as quickly as they needed they were left with the choice: build out a branch network, which is incredibly expensive and risky, or tap the broker network for reach. They chose the broker network.

    By all accounts ING was successful in building a high quality book of mortgage business, with quality clients and a low-risk portfolio, on the back of the mortgage broker channel.

    This shouldn't be seen as a loss to the broker channel, but something to celebrate. Look at what ING was able to accomplish and how much success they had, and now look at how desirable they are to a potential acquirer. Mortgage brokers can take a measure of satisfaction from this.

    The same opportunity will exist for non-branch lenders to offer competitive products and service, without the overhead of a branch network, and some enterprising firm or combination of firms will pick up the slack.

    If a bank buys ING's book and murders it's corporate culture and destroys the raison d'etre its clients had for dealing with it in the first place - most notably an anti-traditional-bank preference, then that'll just open the door for another great competitor to fill the void.

    I think ING's success is a great example of the power of the broker network. Other firms like First National, Merix, MCAP and Street already understand this and are doing a fantastic job.

    Onward and upward.

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