NetBank Shuts Down, ING Bank Acquires Customers

10.01.07 | Online Banking | 0 Comments | by junger

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Now that's not good news.

NetBank, one of the first online banks, has been shut down by the Office of Thrift Supervision and its assets and customers have been assumed by ING Bank.

netbank.jpg

The FDIC was named Receiver (read about what happens when a bank goes under) of NetBank's $2.5 billion in total assets and $2.3 billion in total deposits.

ING Bank has picked up NetBank's 104,000 customers and ~$1.5 billion of deposits for $14 million.

NetBank customers, be aware, neither the FDIC nor ING will be asking you to provide sensitive information via email — so don't give it away.

It is important to note that neither the FDIC as receiver nor ING Bank as the acquiring institution will e-mail customers of NetBank asking them to validate their deposits or to request personal, confidential information, such as account numbers, Social Security Number, driver's license number, etc. If customers receive e-mails asking for such personal information, they should consider them to be fraudulent in nature and should not respond.

The acquisition makes sense for ING — NetBank doesn't have any physical locations. ING has put together a decent FAQ on what the change means for you.

While NetBank's site has been down for normal activity since late last week, you should be able to conduct transactions now.

NetBank was hurt by mortgage losses and weak underwriting, according to Bloomberg.

NetBank had "significant" losses last year from loan defaults, weak underwriting, poor documentation, lack of proper controls and failed business strategies, the U.S. thrift watchdog said.

In November 2006, the bank unwound a mortgage division that extended loans to riskier borrowers, selling some assets of its RV, boat and aircraft financing operation to members of its senior management.

Were you a NetBank customer? Let us know what you think about this news.

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