TORONTO - Scotiabank says it has reached an agreement to buy ING Bank of Canada from Netherlands-based parent ING Group for $3.13 billion in cash.

Scotiabank says the deal will add to its earnings within the first year. ING would continue to operate separately.

ING Groep NV has been struggling to keep its balance sheet healthy amid bad loans and declining margins.

The deal, announced after markets closed Wednesday, is expected to result in a net investment by Scotiabank of $1.9 billion, after deducting the excess capital currently at ING Direct.

Scotiabank (TSX:BNS) is also announcing a public offering of 29 million common shares at $52 — for gross proceeds of $1.5 billion — to fund the acquisition.

The deal, which is subject to regulatory approval, is expected to close by this December.

"ING Direct has had proven success in meeting the needs of those Canadians who are not looking for the added services, advice and relationships provided by traditional banking channels," Rick Waugh, president and CEO of Scotiabank, said in a release.

"We recognize that success and are committed to keeping this unique platform."

Like many of Europe's banks, ING has had to divest assets and lean on emergency funds as anxiety over the Greek debt crisis took a toll on confidence in the continent's financial institutions, which had already been battered by the recession.

The Canadian ING business was established in 1997, attracting customers with its promise of no-fee banking.

They can manage high interest savings and chequing accounts online as well as take out mortgages, or invest in mutual funds _ but withdrawals and deposits are done at various ATM locations.

"ING Direct will benefit from the backing of a strong, stable Canadian shareholder with the additional resources to enable it to expand and grow," said Waugh.

"This in turn will provide our shareholders with a new source of incremental earnings beginning in year one, and a new deposit base to further diversify our funding."

On Tuesday, Scotiabank reported its profits grew by 57 per cent in the third quarter as several divisions improved performance and the bank also benefited from the sale of its headquarters in Toronto.

Net income for the period was $2.05 billion, or $1.69 per share, up from $1.3 billion, or $1.10 per share, a year ago.

Scotiabank's Core EPS, a measurement the bank says best compares with analyst predictions, was $1.22 per share. A survey by Thomson Reuters had shown analysts, on average, expected earnings of $1.19 per share.

Revenue increased to $5.51 billion from $4.3 billion.

The bank said the results also included an after-tax gain of $614 million from the sale of its headquarters, Scotia Plaza, a 68-storey tower near the corner of King and Bay streets.

In its performance breakdown, the bank said its Canadian operations saw profits rise to $521 million from $426 million.

In February, ING sold ING Direct in the U.S. to Capital One for 489 million euros (US$600 million).

In 2010, ING Group unloaded 400 Canadian industrial properties at a $1.3-billion discount to Alberta Investment Management Corp. and KingSett Capital after the European financial giant saw the portfolio's value crash since it was acquired four years ago.

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  • Worst: CIBC - 722

    Number represents overall score out of 1,000.<br> <br> Source: <a href="http://www.jdpower.com/content/press-release/u3sOSZa/2012-canadian-retail-banking-customer-satisfaction-study.htm" target="_hplink">J.D. Power Canadian Retail Banking Customer Satisfaction Survey</a>

  • 4: Scotiabank - 740

    Number represents overall score out of 1,000.<br> <br> Source: <a href="http://www.jdpower.com/content/press-release/u3sOSZa/2012-canadian-retail-banking-customer-satisfaction-study.htm" target="_hplink">J.D. Power Canadian Retail Banking Customer Satisfaction Survey</a>

  • 3: Bank of Montreal - 743

    Number represents overall score out of 1,000.<br> <br> Source: <a href="http://www.jdpower.com/content/press-release/u3sOSZa/2012-canadian-retail-banking-customer-satisfaction-study.htm" target="_hplink">J.D. Power Canadian Retail Banking Customer Satisfaction Survey</a>

  • 2. Royal Bank of Canada - 751

    Number represents overall score out of 1,000.<br> <br> Source: <a href="http://www.jdpower.com/content/press-release/u3sOSZa/2012-canadian-retail-banking-customer-satisfaction-study.htm" target="_hplink">J.D. Power Canadian Retail Banking Customer Satisfaction Survey</a>

  • Best: TD Bank - 769

    Number represents overall score out of 1,000.<br> <br> Source: <a href="http://www.jdpower.com/content/press-release/u3sOSZa/2012-canadian-retail-banking-customer-satisfaction-study.htm" target="_hplink">J.D. Power Canadian Retail Banking Customer Satisfaction Survey</a>


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  • What Canada's Bank CEOs Earned Last Year

  • 6. Louis Vachon, National - $7.5 Mln

    <strong>Profit per dollar earned by the CEO: $162.27</strong> National Bank's Louis Vachon took home $7.5 million, the lowest total of any of the six major banks, but the most in terms of the bank's net income.

  • 5. Gerry McCaughey, CIBC - $9.5 Million

    <strong>Profit per dollar earned by the CEO: $326.32</strong> Gerry McCaughey's total compensation grew 12 per cent, to $9.5 million, in 2011. Source: <a href="https://www.cibc.com/ca/pdf/investor/proxy2012.pdf" target="_hplink">CIBC Management Proxy Circular</a>

  • 4. Bill Downe, BMO - $9.9 Million

    <strong>Profit per dollar earned by the CEO: $330.81</strong> Bill Downe's total compensation for 2011 was up 4.2 per cent from his 2010 pay of $9.5 million. Source: <a href="http://ca.reuters.com/article/businessNews/idCATRE81Q1W320120227" target="_hplink">Reuters</a>

  • 3. Gordon Nixon, RBC - $10.1 Million

    <strong>Profit per dollar earned by the CEO: $480.40</strong> Gordon Nixon's total compensation fell 8 per cent in 2011, to $11 million. Source: <a href="http://www.rbc.com/newsroom/2012/0206-proxy.html" target="_hplink">RBC Management Proxy Circular</a>

  • 2. Rick Waugh, Scotiabank - $10.6 Mln

    <strong>Profit per dollar earned by the CEO: $501.71</strong> Waugh's total earnings for 2011, at $10.6 million, were down slightly from the $10.66 million he earned in 2010. Source: <a href="http://www.thestar.com/business/article/1137400--scotiabank-ceo-s-pay-down-slightly-from-2010" target="_hplink">Toronto Star</a>

  • 1. Ed Clark, TD Bank - $11.3 Million

    <strong>Profit per dollar earned by the CEO: $517.45</strong> Ed Clark's total compensation for 2011 was meant to be around $12 million, but the bank's board scaled it back to $11.3 million -- roughly the same as in 2010. Source: <a href="http://www.thestar.com/business/article/1135817--td-bank-ceo-ed-clark-s-pay-down-to-11-3-million-in-2011" target="_hplink">Toronto Star</a>