Tue, Oct 04, 2016 - Page 10 News List

ING to cut about 5,800 jobs in Europe

DIGITAL TRANSFORMATION:ING in the Netherlands and Belgium are to rely less on bank branches, meaning massive job cuts and savings of about US$1bn for the bank

Bloomberg

ING Groep NV plans to cut about 5,800 jobs in Belgium and the Netherlands over five years to reduce costs as the Dutch lender accelerates its digital transformation.

The bank expects to save about 900 million euros (US$1 billion) a year through the program, which includes about 2,300 cuts in the Netherlands and about 3,500 in Belgium through 2021, ING said in a statement yesterday.

The company, which had 51,833 employees at the end of June, said approximately 7,000 workers will be affected. ING said it would invest about 800 million euros in digital technology.

“Unfortunately, digital transformation means less jobs,” chief financial officer Patrick Flynn said in an interview on Bloomberg Television. “The Netherlands and Belgium need to rely less on bank branches.”

Chief executive officer Ralph Hamers is investing in financial technology to reduce personnel and branch costs and seeking to expand lending to consumers and companies outside its home market of the Netherlands.

While ING has emerged from a restructuring and government bailout with stronger capital buffers than some of its competitors, record-low interest rates and regulatory demands are putting pressure on the Amsterdam-based lender to cut costs.

ING was little changed in Amsterdam trading at 11 euros as of 9:01am. The stock has declined 11.7 percent this year compared with a 24 percent fall in the Bloomberg Europe 500 Banks Index.

“We welcome the group’s plans to improve the efficiency of the bank in light of the headwinds the sector is currently facing from low rates and rising regulatory costs,” Matthias de Wit, an analyst at KBC Securities in Brussels, said in a note to clients. He has a hold rating on the lender.

Commerzbank AG plans to shed 9,600 jobs and is unlikely to consider resuming dividend payments until it has carried out most of the reductions by 2019, the German bank said on Thursday last week.

Deutsche Bank AG is poised to reach an agreement with labor representatives this week that would pave the way for the German lender to eliminate about 1,000 jobs in its home market, according to people with knowledge of the matter.

ING raised its target for common equity Tier 1 ratio, a key measure of financial strength, to above 12.5 percent, forecast a leverage ratio of more than 4 percent, and a cost-to-income ratio of 50 percent to 52 percent.

The bank’s return on equity target of 10 percent to 13 percent was unchanged while it awaits regulatory clarification. ING reiterated that it intends to pay a progressive dividend of more than US$0.65 per share over time.

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