Banking giant Barclays has agreed to buy savings and mortgage business ING Direct UK in a deal that will see it add another 1.5 million customers.
The acquisition will boost Barclays' savings business by £10.9 billion and its mortgage book by £5.6 billion.
Barclays, which will also take on around 750 ING Direct employees, said it would honour existing terms and conditions for ING Direct customers. Barclays said it was too early to say what the impact would be on ING staff once the deal is completed, which is expected to happen in the second quarter of next year, subject to regulatory approval. ING Direct has call centres in Cardiff and Reading, where it also has its head office.
The deal comes after Dutch group ING put its British and Canadian online banking businesses under review in August as it seeks to raise funds to repay cash owed after a state bailout at the height of the financial crisis. ING said it would incur a 320 million euro (£260 million) loss on the sale, as it has agreed to sell its mortgages to Barclays at a 3% discount to the book value.
Jan Hommen, chief executive of ING, said: "ING Direct UK operated in a very competitive market over the past years and I am proud of the excellent customer experience our UK team has built."
Ashok Vaswani, head of Barclays retail and business banking arm in the UK, said: "We intend to maintain the high standard of service and honour the existing terms and conditions (customers) have experienced with ING Direct UK."
ING first launched its online banking venture ING Direct in the UK in 2003 and continues to run similar businesses in Australia, Austria, France, Germany and Italy. The group has already been forced to sell several businesses after receiving billions of pounds from the Dutch government in 2008. Last year it sold its US business ING Direct for around nine billion US dollars (£5.8 billion) and Dutch banking business Westerland-Utrecht.
The ING deal marks the first since Antony Jenkins took over as chief executive of Barclays following predecessor Bob Diamond's resignation in the wake of the Libor rigging scandal.
Banking expert Ian Gordon at Investec said the move to buy ING UK at a discount was "opportunistic". He added: "Barclays has established a strong track record for acquiring bolt-on businesses on the cheap." The bank has made a raft of similar acquisitions in recent years, such as Standard Life Bank and the credit card assets of online lender Egg. The deal is also likely to be taken as a sign that the new management at Barclays is putting retail banking at the heart of its strategy in a possible shift away from more risky investment banking.
For ING, it marks an exit from retail banking in the UK, where it has suffered losses in recent years amid a highly competitive savings market. ING Direct UK made underlying losses of 46 million euro (£37 million) in 2011. Its decision to quit the UK also comes as the wider group looks to refocus on a full-service banking model with more high street branches, which it said would have involved significant investment in the UK. The Canadian ING Direct business, which was also put up for review in August, was sold to Scotiabank for a 1.1 billion euro (£888 million) profit just over a month ago.