One of ING’s biggest broker partners is arguing against fears Scotia will compromise the smaller player’s independence.
“I think it is a good thing that a Canadian bank will be controlling ING,” said Dan Eisner, CEO of True North Mortgages. “Scotiabank is a big supporter of the mortgage industry.
“With the country’s third largest bank behind it, ING will now have more capital available to fund mortgages. This could potentially be a good thing for brokers.”
Other brokers are striking a similar note of relief.
“It’s better than ING being bought by RBC or BMO because those two banks don’t care about the channel,” said Angela Wong-Liao, broker with Invis in Toronto. “I’m positive that Scotia will let ING operate as a separate entity and let it do its own thing.”
But doubters are pointing to Scotia’s track record of gobbling up smaller entities as it did with its 1994 $290 million acquisition of independent trust company Montreal Trust, the 1998 $1.25 billion purchase of National Trust and the 2006 $233 million acquisition of lender Maple Trust.
The moves helped Scotia strengthen weak areas in its retail and wealth management divisions at the same time it solidified its foothold in Ontario and added billions to mortgage portfolios, but also resulted in the closure of duplicate branches, the loss of hundreds of jobs and the disappearance of the Montreal Trust, National Trust and Maple Trust brands.
Another broker raised concerns that the channel is losing a valuable lender because Scotia’s “broker model isn’t nearly as good as ING’s,” said one MortgageBrokerNews.ca reader, responding to an earlier article on the sale. The purchase of the smaller bank, the broker said, also means Canadian consumers lose another mortgage borrowing option.
Not likely said Wong-Liao. She likens the Scotia acquisition to that of CIBC and PC Financial where the larger bank relies of the smaller operation for its Internet and low-fee deposit action.
“Scotia is interested in gaining ING’s successful online banking operation and will leave its mortgage portfolio alone,” Liao told MortgagebrokerNews.ca. “I also doubt ING will disappear like Montreal Trust and National Trust because ING is already a big and highly recognized brand.”
She said it was easy and logical for Scotia to subsume the two other lenders because they were smaller regional entities that operated outside of federal OSFI regulations.
“But ING is already under OSFI like Scotia itself. What’s more, why would you do away with a brand that is already well known,” Liao said.
In a statement accompanying its $3.126 cash offer for ING, Scotia said its intended purchase “preserves ING Bank of Canada's (ING DIRECT) unique and successful model that offers specific value for self-directed customers as a distinct, wholly-owned subsidiary.”
Eisner, for one, is hopeful the bigger bank would keep its word.
“Under the terms of the agreement, Scotia is allowed to use the name ING for 18 months after which Scotia can rebrand it,” he said. “But even with a rebrand I am confident Scotia will be smart enough retain ING’s effective business model and continue to actively work with the channel.”