When Scotia Bank purchased the Canadian arm of ING Direct
last September with a closing Dec 31, we knew that the writing was on the wall,
only question was to what degree. Obviously, there is a duplication of
services, and direct competition between what would now become one lenders
services. ING for the last year has been one of our lowest rate lenders cutting
.10 BPS off their web site rates to broker channel business, which has
therefore undercut Scotia bank rates(and many other banks for that matter). We
at least expected that to end with the Scotia purchase.
ING's letter to brokers stated that it's hope was that the
broker channel will now funnel that ING business through to Scotia. Well
the reality is that if Scotia doesn't become more aggressive with rates that
will never happen.
In early 2011, ING began registering all of their mortgages
as collateral, similar as to what T.D. Bank did in 2011. Brokers see and the
public should see, that as a negative change, being sold to the public as
easier future lending, when in fact in my eyes it is all about customer
retention. Making it harder(more expensive) to the client when they try and
leave when the mortgage is up for maturity.
Since the announcement of ING departing, the reality is that
the other lenders in the broker channel are all lining up to get their piece of
the ING business, so Scotia will likely see very little of the past ING
business, unless as mentioned, they become very aggressive in rates. That being
said, the reality is that Scotia may not care. ING is a no fee bank, and Scotia
may be saying that the profit structure in paying brokers and aggressive rates
is not cost effective, thus the decision to leave the broker channel.
Yes, we will miss ING, and in time the name may also be
swallowed up by Scotia, and the public could lose a good no fee bank. Only time
will tell to what degree that happens. But the bottom line is we all lose in
this acquisition.
Dan :)
