ING Group Selling $2 Billion in Mortgage Bonds from ING Australia Bank, Australia's Fifth Largest Mortgage Lender
ING Group, announced it may sell $2 billion in mortgage bonds from its Australian branch, reported Bloomberg.
ING DIRECT, marketed as ING Bank (Australia) Ltd., is the Dutch firm's only online banking branch outside the European grasp. It's also the country's fifth largest mortgage lender for Australian homeowners.
The news came as a result of ING Direct's focus to drift away from federal and public funding and towards mortgage-backed securities.
"For a bank that is focused on mortgages like us, it is a way of diversifying our funding," said Vaughn Richtor, the Chief Executive Officer, in an interview with Bloomberg. "We would hope to do a couple of issues this year between A$500 million to A$1 billion each."
It's also the culminating result of the global financial system woes, which is lowering the value of bonds. ING Direct hopes their move will to attract more investors.
The bank, according to Bloomberg data, has pulled together A$4.25 billion, or approximately $2.05 billion, of mortgage bonds back in 2010 and already issued securities worth A$1.8 billion last year.
The Dutch transacted the bank's 2008 bailout worth $13.3 billion after the U.S. branch took a bad turn in the downfall of subprime mortgages. It subsequently sold the American online bank in 2011 along with a Canadian and U.K. branches.
The online bank was operated by Richtor in 1999 and left in 2006 to head Asian branches. He resumed his post last year. Currently, ING still operates online banking in France, Germany, Italy and Spain, according to Bloomberg.
ING Australia streamlined the banking system at the time in 2010, by providing straight and simple home loans. As one of the largest mortgage lenders serving 1.4 million, they currently hold $38 billion in mortgages and $26 billion in deposits, according to their database.
"There isn't any sign of a pickup," Richtor said to Bloomberg. "Mortgage demand will continue to remain weak. Since the financial crisis people are being a lot more conservative."