ING, one of Europe's largest banks, is taking a measured approach to growth. Instead of pursuing big-ticket acquisitions, the Dutch lender is relying on small, targeted deals — known as bolt-on acquisitions — to build up its fee income. The strategy is part of a broader push to make the bank less dependent on the ups and downs of interest rates.
The bank's recent moves into private wealth management in Spain and Poland are prime examples. These are not transformative takeovers, but rather strategic additions that fill gaps in ING's existing business. CEO Steven van Rijswijk told Reuters that the bank is essentially “filling in the blanks” with these purchases and organic growth, rather than pursuing large-scale M&A.
Why Fee Income Matters
For years, ING, like many European banks, has relied heavily on net interest income — the difference between what it earns on loans and what it pays out on deposits. That model has been highly profitable during periods of rising interest rates, but it comes with risks. When central banks cut rates, or when competition forces banks to offer higher savings rates, that income stream can shrink quickly.
Fee income, by contrast, is more stable. It comes from services like wealth management, investment advice, and transaction fees. By boosting this revenue stream, ING can smooth out its earnings and reduce its vulnerability to monetary policy shifts. The bank has set a clear target: fees should make up about 20% of total income by the end of 2025.
This is a common theme across the banking sector. Many lenders are trying to diversify away from pure lending income, especially as the era of high interest rates may be peaking. For context, ING recently lifted its income forecast to over €24.5 billion, partly thanks to strong fee income growth.
Bolt-On Deals vs. Mega M&A
Bolt-on acquisitions are small, complementary purchases that fit neatly into an existing business. They are less risky than large mergers, which can be complex to integrate and often face regulatory hurdles. ING's approach mirrors that of other financial firms that prefer to grow through targeted buys rather than blockbuster deals.
The bank's focus on private wealth in Spain and Poland is telling. These are markets where ING already has a presence, and where demand for wealth management services is growing. By adding local capabilities, the bank can capture more fee income without taking on the risks of a major acquisition.
This strategy also reflects a broader trend in European banking. Many lenders are opening private markets to more investors, seeking to tap into the steady revenue that comes from managing assets for wealthy clients. ING's moves in Spain and Poland are part of that same push.
What It Means for Investors
For everyday investors, ING's strategy signals a shift toward more predictable earnings. A bank that relies less on interest rate swings and more on fee income is generally seen as less risky. That can be appealing in an environment where central bank policy is uncertain.
However, building fee income takes time. Bolt-on deals are small, so their impact on overall revenue may be gradual. Investors should watch for signs that ING is hitting its 20% target by 2025, as that would indicate the strategy is working.
It's also worth noting that ING is not alone in this approach. Other European banks, like BBVA, have also been boosting profits through lending income while expanding fee-based services. The difference is that ING is explicitly avoiding big M&A, preferring to grow organically and through small deals.
For investors holding ING stock, the key takeaway is that management is focused on building a more resilient business. The bank is not chasing growth for growth's sake, but rather aiming for steady, sustainable improvement. That could make it a more stable long-term holding, especially if interest rates start to fall.
As always, no single strategy guarantees success. But ING's disciplined approach to fee income growth is a clear signal that the bank is thinking about the next phase of the economic cycle — not just the current one.
