Sale of Online Banking Pioneer ING Direct Said to Have Started
The sale of ING Direct USA, one of the first online banks to secure a sizable customer base, appears to have formally begun.
Dealbook, the New York Times blog, is reporting that it confirmed with ING NV officials that the unit is in play. ING told Dealbook that it is selling the online banking unit to “satisfy requirements imposed by the European Commission as part of the firm’s 10 billion euro bailout in 2008.”
The Dutch government has been on ING’s case about its online bank since the height of the credit crisis. Back in 2008, the Dutch government told ING NV, the online bank’s parent, that ING Direct is to be sold by 2013. That timeline appears to remain on track.
The New York Post first reported the most recent news about the sale. The Post claims that ING Direct “could fetch as much as $10 billion.” The Post says CIT Group is a possible suitor.
Globally, ING Direct had about 22 million customers at the end of 2008, 7.5 million of those we believe we in the US. The overall ING Direct unit lost 1.2 billion euros that year.
At the end of last year, ING Direct USA, a Delaware-based bank, had 2,352 employees, according to FDIC data. The unit’s loan portfolio totaled $40 billion and its deposit base $77.7 billion last year. Based on the math shared by Carlos Tobin below, ING Direct USA’s deposit base last year implies that it manages less than 8 million active accounts. The deposit base grew a modest 3.4% last year, much lower than some of the steeper deposit expansion experienced by some other US banks, and seemingly extremely low considering that ING Direct centers on the presumably fast-growing online banking sector.
ING Direct USA generated $293.6 million of net operating income last year, up from $43.2 million in 2009. A $10 billion price tag implies a multiple to net operating income of more than 34x, and I think we can all agree that that seems, uh, high.
See this forum for a discussion on valuation for an online bank vs. a brick-and-mortar bank.
[Editor’s Note: This post was updated on March 10 based on the comments posted below.]
