ING Direct is diversifying its investment strategy to include commercial mortgage-backed securities and eventually asset-backed securities. The tight spread environment is pushing the bank to seek higher returns in other asset classes, one market official said.

Until recently, the Wilmington, Del.-based online bank put money from its deposits to work in mortgage-backed securities. But the over past six to eight months the bank has also been buying CMBS and is considering investing in ABS in the next six to nine months, the official said.

ING will particularly be looking at the credit card and auto sectors. The bank has also recently starting managing its own money instead of bringing on an outside manager, the official noted.

ING Direct officials declined comment.