TORONTO (Reuters) - ING Direct Canada will cease selling mortgages through brokers next month due to overlap with the larger broker-sourced mortgage business of its parent company, Bank of Nova Scotia (BNS.TO), a bank spokesman said on Wednesday.
Scotiabank, which has the largest Canadian broker-sourced mortgage business, bought ING Direct from Dutch lender ING Groep ING.AS for C$3.1 billion ($3.15 billion) late last year.
ING Direct is Canada’s No. 7 mortgage broker lender, and will cease operating it next month, Scotiabank spokesman Andrew Chornenky said.
“We’re going to be transitioning the mortgage broker’s business to Scotiabank,” he said.
It was unclear what impact the move would have on Scotiabank’s overall loan portfolio.
In addition to issuing mortgages directly to consumers, most Canadian lenders also issue them through brokers, who offer loans at cheaper rates. This gives the lenders access to a larger customer pool for their mortgages, but cuts their overall margins.
The move follows Canadian Imperial Bank of Commerce’s (CM.TO) decision last year to shut down its FirstLine Mortgage broker channel to refocus its business on bank-branded wider margin loans.
However, unlike that move, Scotiabank will continue to offer mortgages through brokers. ING will also continue to offer mortgages through its direct channel.
Shares of Scotiabank, which is Canada’s third-largest bank, were down 28 Canadian cents at C$57.42 on the Toronto Stock Exchange.
Reporting By Cameron French; Editing by Gary Hill and Diane Craft