Holders of mortgages and savings accounts with ING Direct will become Barclays customers next year.
Barclays has this week announced a takeover of the Dutch-owned online and telephone bank.
But what does this mean for ING’s approximately 1.5 million UK customers?
In the short term, little will change, as the deal needs to clear a number of administrative hurdles before it is given the go-ahead by UK banking regulators.
But the takeover is not expected to meet serious opposition, and Barclays expects the process to be wrapped up by next spring.
It is not clear yet whether the ING brand will be maintained, but some analysts think this is unlikely since ING also currently operates as an international brand.
Outlook for savers
Since it entered the UK market almost a decade ago, ING has tended to offer better-than-average rates on its savings accounts and ISAs.
The same cannot be said of Barclays.
So if you have an ING account with a guaranteed rate of interest for a certain period, there is even more incentive to shop around for a better deal when this rate ends.
But Barclays will not be able to reduce savings rates before the agreed date.
With that in mind, there is no reason not to open an ING account before the takeover goes through.
For example, its instant-access savings account currently pays a respectable 2.7 per cent, which is guaranteed for the first year regardless of which company actually runs the account.
And the ING cash ISA pays 2.8 per cent with the same guarantee.
Check our savings best-buy tables for more information.
Likewise, people who have mortgages with ING will see no immediate changes to their terms and conditions as a result of the Barclays deal.
If you have a fixed-term loan, it will continue as at present until the end of the term. At this point, the mortgage will revert to the standard variable rate (SVR) of interest.
At the moment, Barclays’ SVR is 3.89 per cent and ING’s 3.99 per cent.
Borrowers will then be able to shop around for a new deal without having to pay any exit fees.
Consolidation in the banking sector
Barclays’ takeover of ING is the latest example of consolidation in the UK banking sector.
Over the past five years, Halifax has been bought by Lloyds and on a smaller scale the likes of Alliance & Leicester, Bradford & Bingley, Intelligent Finance and Egg have disappeared, been scaled back, or been swallowed up by other organisations.
This has led to fears that less choice will lead to worse rates for savers and borrowers.
There have been a number of new entrants to the banking sector, such as Aldermore, M&S and Virgin Money, but it remains to be seen what impact these smaller players will have on competition.