ING to shed 2,400 jobs as profits lag

PAYING DUES::ING received a 10 billion-euro bailout in 2008 as assets held at their US unit plunged during the financial crisis, but it has repaid 7.8 billion euros to date


Thu, Feb 14, 2013 - Page 6

ING Groep NV, the biggest Dutch financial-services company, will shed 1,400 jobs in the Netherlands and 1,000 in Belgium after saying fourth-quarter profit missed estimates and its core capital ratio fell.

Net income was 1.43 billion euros (US$1.92 billion) compared with 1.19 billion euros a year earlier, the Amsterdam-based company said in an e-mailed statement yesterday. That missed the 1.63 billion euro median estimate of 12 analysts surveyed by Bloomberg. The results included 643 million euros in special items after tax, mostly related to restructuring costs.

ING chief executive officer Jan Hommen, 69, will eliminate the 2,400 jobs in addition to 2,350 positions in commercial banking and insurance units announced in November last year.

Last year he won more time from EU regulators to divest insurance operations and repay a 2008 government bailout. He is seeking to cut costs by 1 billion euros a year by 2015.

“As we embark on 2013, the economic climate remains challenging, and we must be agile to respond quickly to the dynamic environment so that we can deliver sustainable results for the long-term benefit of all stakeholders,” Hommen said in the statement.

ING’s core Tier 1 capital ratio, a key measure of financial strength, dropped to 11.9 percent at the end of December last year from 12.1 percent in the third quarter.

Profit excluding divestments and one-time items was 455 million euros, compared to a loss of 849 million euros a year earlier, the company said. That missed a 614 million-euro estimate of 10 analysts in a Bloomberg survey.

Fourth-quarter earnings included 175 million euros in a Dutch bank tax, introduced in October last year to force lenders to share in the costs of ensuring financial stability after the nation bailed out companies including ING, SNS Reaal NV and ABN Amro Group NV in 2008 and 2009.

On top of the tax, ING will have to pay about a third of a 1 billion-euro one-time industry levy next year imposed after the Netherlands took control of SNS Reaal on Feb. 1.

ING shares slid 7.3 percent in Amsterdam since this month’s nationalization of its smaller competitor for 3.7 billion euros. Shareholders and holders of subordinated bonds in SNS were also forced to share in the costs of the bailout.

The decline in the share price meant shareholders lost 1.8 percent this year compared with a 9.2 percent gain for banks in the Stoxx Europe 600 Index and a 1.3 percent increase for Europe’s benchmark gauge for insurance companies.

ING received a 10 billion euro bailout by the Dutch state in 2008, triggered as subprime mortgage assets held at its US unit plunged. It has returned 7.8 billion euros, with 2.4 billion euros in interest and premiums, to date.

The Dutch firm was ordered to sell its global insurance and asset management operations before the end of this year as a condition of the bailout.

The European Commission said on Nov. 19 last year that it extended the deadline because of current market conditions. Under the new timeline ING has until the end of 2018 to complete the disposal of its European insurance arm.

In the fourth quarter, ING completed the sale of its Malaysian insurance unit to AIA Group Ltd for 1.3 billion euros.

The disposal of its Canadian online bank in November last year resulted in a 1.1 billion euros gain after tax.