ING Facing 2,700 Job Cuts

11/03/2011 08:24 am ET | Updated Jan 03, 2012

Dutch financial services group ING is to cut 2,700 staff and contract jobs, it said on Thursday in announcing third-quarter results, slashing the headcount at its Dutch retail banking operations by 10 percent in the face of deteriorating markets.

The cuts follow similar measures at ING's Dutch rivals ABN AMRO and Rabobank, and reflect the downturn in the global financial markets and a push to improve efficiency in the domestic market.

The Dutch central bank said on Wednesday that Dutch banks were inefficient compared with their foreign rivals and saw room for them to cut costs.

ABN AMRO, which was nationalized in the 2008 financial crisis, is shedding 2,350 jobs or some 9 percent of its workforce, while Rabobank has announced plans to cut more than 1,200 jobs at its Dutch headquarters or 6 pct of staff jobs.

"Income is coming under pressure in the current environment. We need to make sure we remain competitive," ING Chief Executive Jan Hommen said on a conference call with analysts.

Other banks such as JPMorgan Chase and Credit Suisse are shedding jobs worldwide as stricter regulations and a tough trading environment take their toll on investment banking units in particular.

ING said it will cut 2,000 full-time staff, or 10.5 percent of its Dutch retail banking operations, where it has about 19,000 full-time employees. It will also cut 700 contract positions.

GREEK BONDS WRITEDOWN

ING took a 467 million-euro pre-tax writedown on Greek government bonds in its third-quarter results and said it has now written down all of its bonds to market value and reduced exposure to 'peripheral' euro zone bonds by more than 5 billion euros.

European leaders were preparing on Thursday for the possibility of Greece falling out of the euro zone, although Hommen said it would be better to keep Greece in the 12-year-old currency union.

"It's better for the country itself, it's better for Europe, and it's better for the financial system. But there is a price to everything," Hommen said.

REDUCED EXPOSURE

ING shares, which have fallen around 15 percent this week on Europe's debt problems, were up 2 percent at 5.77 euros by 0952 GMT, outperforming the STOXX Europe 600 insurance index, which rose 0.6 percent.

"The bank and the insurer results were good and we do not have to change our future earnings estimates. Their exposure to Portugal, Italy, Ireland, Greece and Spain has been well reduced to very manageable proportions," Rabobank analyst Cor Kluis said in a note.

ING plans to list its U.S. insurance operations and its combined European and Asian insurance operations in the next two years, as part of European Commission approval for state aid received in 2008 during the credit crisis.

Hommen said ING has continued with preparations for the IPOs but that financial markets in the United States and Europe were not open to a financial stock listing because of the debt crisis and market turmoil.

ING has already paid back part of the state aid and still needs to repay 3 billion euros plus a 50 percent premium.

Hommen said ING was sticking to its plan "to do it as quickly as we can" but did not repeat the previously stated goal of repaying the funds in full by May 2012.

"We also need to take into account circumstances that are here. You may have seen the heightened requirements for banks in Europe with respect to capital," Hommen said.

ING had received an additional 5 billion euros in inflows from clients in the third quarter, especially corporate and institutional clients, and had not suffered from worries about banks due to Europe's debt crisis, Hommen said.

The group's third-quarter net profit of 1.69 billion euros was slightly ahead of the average forecast of 1.6 billion euros in a Reuters poll of nine analysts.

Net profit was revised to 239 million euros in the same period last year, when results were impacted by writedowns related to U.S. insurance operations. ING said the year-ago figures were restated to reflect a change in accounting policy.

(Editing by Mike Nesbit and Greg Mahlich)

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