The Dutch financial giant ING caused a big surprise at the beginning of March with its announcement that it would give up its private customer business in Austria. Around 340 employees have feared for their jobs since then. Because it is still open in which form the withdrawal should take place by the end of 2021. A sale would also be conceivable. After all, the online part of ING Austria’s business has around 550,000 customers with savings deposits, current accounts, securities accounts as well as consumer and real estate loans.
“We are evaluating strategic options that also include a possible sale of the private customer business,” said the head of the Austrian ING subsidiary, Barbaros Uygun, via mail at the beginning of the month. A firm decision on whether to sell or not is still pending. In the case of ING Austria, based in Vienna, it is assumed that this will be available in the course of the second quarter. “Logically, a decision has to be made by the end of June because we have to reduce our products,” explains a spokeswoman for the digital bank in an interview with the “Wiener Zeitung”.
Pure savings customers are hardly interesting for other banks
What exactly could be sold by the business division, should the bank management decide to sell, is of course unclear. Especially since in the course of the withdrawal it is planned, in a first step, to end relationships with those customers who only have a savings account with ING Austria at the beginning of June. They should be notified in writing from April onwards and their savings should then be transferred to their reference account. As can be heard from the financial sector, it is about 400,000 to 450,000 customers for whom the ING savings account was usually a secondary account.
However, it is precisely here that things get stuck. “None of the larger banks will scramble for these customers, especially if they are practically sold with the rest of ING Austria’s private customer business,” analyzes a banker who wants to remain anonymous. The problem: For excess liquidity that commercial banks park at the European Central Bank (ECB), they currently have to pay penalty interest, which according to the law they are not allowed to pass on to private customers in Austria in the form of negative interest.
This is exactly the problem with ING Austria, which in the past relied too much on the business with savings deposits and for which pure savings customers are now likely to have turned into a loss-making business due to the low interest rate environment that has existed for years. “We would have had to part with the savings customers earlier,” is now acknowledged at ING in Austria. It is formulated more drastically in the industry: “The bank has failed with its business model.”
“The, rest ?? is more attractive then”
Without the pure savings customers, ING Austria’s private customer division would comprise 100,000 to 150,000 customers. Whereby there would in turn be around 50,000 house bank customers – i.e. customers who use at least one other product of the bank in addition to a current account with regular incoming payments – for example in the area of financing or securities investments. “The rest is more attractive then, and the market would very well put out feelers to this customer pool,” says the industry insider mentioned above.
Domestic banks that might be interested parties do not want to lean too far out of the window for the time being. At Post AG, for example, which is currently in the process of further developing its financial institution, “bank99”, which was launched in April 2020, they say: “Every customer that is available on the market is interesting for us. But currently there is no offer from us that is specifically aimed at the customers of ING Austria. ” Other institutions – including Bank Austria, Erste Bank, Raiffeisen and Bawag – would be interested in individual customers, but would not decide whether they would be interested in ING Austria’s private customer business if it were to be sold. The Oberbank would have no interest at all: “No, we are not interested.”
Now focus on business with corporate customers
If ING Austria should cease its private customer business without selling it, there is a need for discussion from the point of view of consumer advocates – especially when it comes to rescheduling loans or transferring securities accounts. It could be more complex for some customers, as they say. In the case of a sale of the business to another bank, it would normally be the case that existing contracts usually remain valid with their old conditions and the buyer bank automatically replaces ING as the new contractual partner.
However, ING does not want to turn its back entirely on Austria after entering the market 18 years ago. In the future, she would like to concentrate exclusively on the more lucrative business with corporate customers. 14 employees are currently working in this area in Vienna.