ING mulls sale of Canadian bank unit

ING Groep NV says it is reviewing its internet banking arms in Britain and Canada as prelude to a possible sale.

"ING …is currently reviewing strategic options for ING Direct Canada and ING Direct UK," ING Groep NV said in a press release. "These reviews may or may not lead to transactions, and no decisions have yet been made in this regard."

ING Direct is Canada's largest internet bank. Founded in 1997, it now has 1.8 million customers. The bank has roughly $30 billion worth of loans on its books, primarily residential mortgages. And has $30 billion worth of deposits from individual investors.

Predominantly known for its groundbreaking high-interest savings account, the company has also branched into TFSAs, RRSPs, GICs, low-cost mutual funds and in August of 2010, launched a no-fee chequing account.

A report by Credit Suisse banking analyst Gabriel Dechaine said Friday the Canadian unit could fetch as much as $1.7 billion to $2.6 billion in a sale. He suggested Scotiabank and National Bank would be "natural buyers" for ING's Canadian business because both banks are relatively weak on the deposit business.

ING is struggling to keep its balance sheet healthy amid bad loans and declining margins, as well as an obligation to repay three billion euros worth of bailout funds it received from the Dutch government during the 2008 financial crisis.

In February, ING sold ING Direct in the U.S. to Capital One for $600 million.

The British ING unit has 1.5 million customers.