ING Group

ING Group NV, or the International Netherlands Group, is a large Dutch banking operation with a very large investment banking operation. ING has more than 125,000 employees and 8.5 million customers in forty countries around the world. Forbes has judged it to be the eighth largest company in the world. It is headquartered in Amsterdam, near Schiphol airport.

ING is mostly known outside the Netherlands for its high interest internet savings accounts, usually branded as “ING Direct”. The business model with these accounts is usually to offer a very high interest rate in an easy to open account and after a couple of years to progressively lower the interest rate. They have very low running costs, due to the fact that accounts are solely operated over the internet and not through any branches. They are also aggressive advertisers in most markets that they have entered, which includes the UK, Australia, Canada, France and Spain. The USA also has an ING Direct operation although this is likely to be sold off by 2013. They are seen by some as a model internet bank despite the fact that they have an extensive retail operation in the Netherlands.

ING has a particularly large investment presence due to its purchase of the British Barings Bank in 1995. Barings Bank was one of the oldest investment banks in the world, being founded in the seventeenth century. The Baring family took an active interest in the bank throughout its history and the family was one of the grandest in the City of London, with at least two hereditary noble titles and with many of the bank’s chairmen (who were almost all from the Baring family) becoming chairman of the Bank of England after they retired. Among other assets, Barings Bank had the original purchase document of the Louisiana Purchase, which Barings had helped to finance.

Baring Bank fell due to poor controls which allowed a rogue trader, Nick Leeson, to build up unsustainable positions on the Japanese market which Barings could not back up. Barings was bailed out by its competitors and its operations were sold to ING for one British pound, although ING was also responsible for Barings’ liabilities. The US based operations were quickly sold to the Dutch bank ABN AMRO. Barings Asset Management was kept on without the ING name, managing the wealth of a large number of trusts, charities and families, although this was sold to Northern Trust and MassMutual. Any use of the name Barings Asset Management is now reserved for MassMutual.

ING was the result of a merger of the National Netherlands insurance group, one of the largest insurance companies in the Netherlands and the Postbank the postal operations of the Dutch post office which were subsequently privatized. Of the 8.5 million customers, 7.5 million came from the Postbank, although they tended to be far smaller than the customers subsequently attracted by their internet based savings accounts in other parts of the world. While this group had a formidable domestic retail base they had virtually no investment banking expertise. With the purchase of Barings they made up for this shortfall.

ING has an active investment banking operation, based on the Barings operations and headquartered in London. Much of this is under threat as the Dutch government had to inject capital into ING after the collapse of the credit markets in 2008. Although ING continues as a private banking operation, one of the terms of this rescue were that the Dutch government would have the ability to veto decisions, and the Dutch government has shown some skepticism towards foreign operations.