Join our investing community

How safe is ING????

Discussion in 'Money Management' started by handyandy, 26th Oct, 2007.

  1. handyandy

    handyandy Well-Known Member

    Joined:
    6th Jun, 2006
    Posts:
    312
    Location:
    Sydney Nsw
    Hi All

    Just thought I would seek some opinions re how safe is ING.

    It always worries me when banks started giving interest on deposits which is virtually = to the interest they are charging.

    The one particualr instance that I remember is Pyramid who simply closed their door and all deposits went bye bye. In this case they weren't a bank but then is ING actually under the banking provisions etc???

    As I said I just thought I would put it out there to see what everybody thought.

    Cheers
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,570
    Location:
    Sydney, Australia
    ING are one of the larger global financial institutions ... if size has anything to do with it, they'd be considered very safe. (I know that's not enough to guarantee safety, but they aren't a one-product-wonder).

    When their ING Direct product was first launched, it was fairly revolutionary for Australia (everybody else copied later), and I had never heard of the company prior to that - I was surprised to learn that they were global company!

    To a degree, I've always considered their product a branding exercise more than anything ... especially since they now offer loans and investment products to the local market ... I have no idea how profitable such bank accounts are, but their costs would have to be very low compared to traditional bank accounts ... especially since I've never set foot inside an ING office or branch despite having used their bank accounts for many years!

    Interesting question though.
     
  3. Nigel Ward

    Nigel Ward Team InvestEd

    Joined:
    10th Jun, 2005
    Posts:
    1,172
    Which is exactly the way they like it! Branches cost money...as do pesky things like employees!

    N.
     
  4. handyandy

    handyandy Well-Known Member

    Joined:
    6th Jun, 2006
    Posts:
    312
    Location:
    Sydney Nsw
    Just as an addendum I have today moved my money out of ING back into St George, who as Sim mentioned, were one of the banks that came out with a comparable product.

    Prior to opening the ING accounts I looked into what ING was all about and found that they were a large Dutch based insurance organization and took some comfort from their size. But now hearing the start (or continuing ) Sub prime meltdown and the extent of the affect of financial institution I just get this slightly uneasy feeling that they may be involved. I say this all purely of intuition and non of this has any basis in fact:eek:

    Why am I using St George - because they are covered by the banking act and as such their deposits should have insurance. I was never able to confirm that ING had this same cover.

    Maybe I am completely wrong but what the hell, its done.

    Cheers
     
  5. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,570
    Location:
    Sydney, Australia
    FWIW, I started using NAB's iSaver account and closed our ING Direct accounts a while back for our personal banking, not so much because the rate was better (6.3% for NAB vs 6.15% for ING) or because I trusted the NAB any more than I would trust ING ... but because I could access the funds in the NAB iSaver account instantly if I needed them.

    It's not that big a deal, but I hate waiting a day each time I want to make a transaction ... I have once or twice done a series of transactions as follows:

    1. Say I want to make an expense claim (let's say, $3,000) against my company to reimburse me for business expenses I've paid personally (eg on my personal credit card)

    2. Company account doesn't have enough money in it because it loaned it all to my trust as a short term loan (to be paid back before the EoFY). Company looks to the trust to pay back some of the loan now to meet cashflow requirements.

    3. Trust bank account doesn't have enough money in it to pay back part of the loan immediately because it is all invested (and more specifically because I don't want to drop my trust bank balance below my usual threshold). This is the only problem with managed funds - short term cashflow can be an issue if distributions are infrequent!

    4. Trust looks to borrow some more money from me to cover it's short term cashflow requirements (interest free loan).

    5. I don't have enough money in my personal bank account to loan any more to the trust at the moment, because it is all in the savings account.

    6. Transfer $5,000 from the NAB iSaver account to my personal bank account

    7. Transfer $5,000 from my personal bank account to my trust bank account as a loan (adjust personal Quicken records and trust Quickbooks records to reflect increased loan balance)

    8. Transfer $5,000 from trust bank account to company bank account to pay back part of that loan (adjust trust and company Quickbooks records to reflect the decreased loan balance)

    9. Transfer $3,000 from company bank account to personal bank account as expense reimbursement, leaving $2,000 in there for other operating expenses. Adjust personal Quicken and company Quickbooks records to show expense claim paid

    10. Transfer $3,000 from personal account back into iSaver account

    :D

    Now imagine doing this if I had to wait a day between transactions :eek: ... now it only takes couple of minutes to do it all!

    Not that I do this regularly - usually only towards the end of financial year when I'm making sure all expense claims are paid and only if current cashflow situation dictates that I must.

    Naturally accurate record keeping is important if you are going to juggle money like this! :rolleyes:
     
  6. DaveA

    DaveA Well-Known Member

    Joined:
    19th Feb, 2007
    Posts:
    617
    Location:
    Sydney, NSW
    that just confuses me reading it.... glad your accountant has the handle on it all....
     
  7. AsxBroker

    AsxBroker Well-Known Member

    Joined:
    8th Sep, 2007
    Posts:
    1,448
    Location:
    Sydney, NSW
    Hi HandyAndy,

    ING Australia is owned 49% by ANZ and 51% by ING Group Netherlands ING Australia > ING Group

    Hence, why ANZ use ING investment products and insurance...

    Cheers,

    Dan
     
  8. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,570
    Location:
    Sydney, Australia
    Ahh - I didn't know that! Thanks.
     
  9. Nigel Ward

    Nigel Ward Team InvestEd

    Joined:
    10th Jun, 2005
    Posts:
    1,172
    Hi HA!

    We should always be cautious but see the following from ING Group homepage

    Market cap: 72 billion Euro (so a good deal bigger than the Australian banks)

    Form your own view...but I wouldn't be overly concerned!

    Cheers
    N.

     
  10. austing

    austing Well-Known Member

    Joined:
    5th Jun, 2006
    Posts:
    296
    Location:
    north maleny
    Hi Gang,

    I have been using Bankwest's online saving account for the cash component of our SMSF. Their rate has been higher than ING's for awhile now. HBOS, also very big, is the ower and hence I imagine Bankwest is also a safe option.

    Cheers - Gordon
     
  11. Rob G.

    Rob G. Well-Known Member

    Joined:
    6th Jun, 2007
    Posts:
    717
    Location:
    Melbourne, VIC
    Hi,

    Pyramid was a building society.

    Depositors did not lose their capital, the Victorian motoring public paid a high fuel levy to reimburse them (without lost interest) over a few years.

    The shareholders, many of whom thought they were depositors, were left hanging.

    Banks are the most highly geared institutions - i.e. they lend their credit and not their money. This is tantamount to 'creating money'. e.g. Galbraith (Money: Whence it Came, Where it Went) describes a US bank that failed in the 1830s that circulated a note of $500,000 supported by reserves of $86.48. He describes this as a 'modest backing' - what prose !!

    The Australian Banking system collapsed in the early 1890s (54 out of 64 'banks'), most were structured for dodgy high-risk real estate deals and were caught by a falling Melbourne property market (see T Sykes, Two Centuries of Panic: A History of Corporate Collapses in Australia).

    Now in Australia, banks are the subject of prudential supervision by the Reserve Bank. They are also much larger and fewer nowadays.

    The US is different. The regulations used to limit the size of banks so they were a lot of little shaky dominoes, very hard to supervise.

    Note that most of the Australian prudential regulation is voluntary and banks are not guaranteed.

    The biggest unknown is the practice of moving their loan books off the balance sheet using equitable assignments. Therefore there is no need to declare contingent interests or liabilities in their financial reports.

    So although Australia is generally in a better position than the US, we don't know by how much due to these 'hidden assets'.

    I might add that a couple of banks did not get a great report by the Australian Shareholders Association due to their aggressive drive to gain market share by lowering lending standards. This was published just before the US sub-prime mortgage meltdown.

    So what am I saying ?

    Well its up to you to do your own due dilligence. Stick with the AAA lenders and you have a better chance.

    BUT your bank may have assigned your mortgage to a shaky intermediary who may need to call in the loan through no fault of yours (read the clause about right to demand at any time). Hopefully the bank will do the right thing and reacquire the liability without affecting you, otherwise you may need to refinance at short notice - and at a very bad time.

    Cheers,

    Rob
     
  12. Mark Laszczuk

    Mark Laszczuk Well-Known Member

    Joined:
    16th Aug, 2005
    Posts:
    793
    Location:
    Brisbane
    Yes... I vaguely remember getting about 10 cents in the dollar back after about 7 years or something.

    Mark