ING chief quits as 7,000 jobs shed
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The chief executive of Dutch bank and insurance group ING, Michel Tilmant, resigned on Monday as the company announced it would shed 7,000 jobs worldwide this year.
AFP - Dutch banking and insurance giant ING announced plans to cut costs and offload risks on Monday, saying it would shed 7,000 jobs this year and that its executive director was being replaced.
The net result for 2008 was expected to show a loss of 1.0 billion euros (1.29 billion dollars), reflecting the sale of its insurance business in Taiwan and the end of pension operations in Argentina.
On preliminary data, it would have a 2008 underlying profit of 500 million euros from banking and a loss of 900 million euros from insurance owing to a fall in all classes of assets.
For the fourth quarter, the group expected an underlying net loss of 3.3 billion euros after underlying banking losses of 1.3 billion euros and insurance losses of 2.0 billion euros.
ING also said that owing to "the extraordinary developments" in recent months "and given his personal condition, Michel Tilmant will step down as chief executive.
Tilmant is to be replaced by Jan Hommen, currently chairman of the supervisory board.
The Dutch government injected 10 billion euros (13.3 billion dollars) into ING in October to help it weather the economic crisis.
ING is one of the world's top 20 banks by market capitalisation, with 85 million clients and 130,000 employees.
The group, which has expanded aggressively across the world in the last decade, said that its capital base "remained strong" at 28.6 billion euros, up from 25.6 billion euros at the end of the third quarter.
But it revealed a huge deal for the Dutch state would cover 80 percent of the risk on a 27.7-billion-euro portfolio of US assets which would otherwise remain fully in the bank's ownership.
The state would in return get 80 percent of any returns made on the US assets, which a bank spokesman said were not of the best quality but not as bad as the sub-prime or higher risk debt at the heart of the credit crunch.
The group said that it would cut 7,000 jobs throughout the world this year to generate savings of 1.0 billion euros this year and 1.1 billion euros annually thereafter.
The rest of the savings would come from cutting costs "for our head office, marketing, the Formula One (racing car) programme, consultancy, third-party staff" and the renegotiation of some contracts for information technology.
Of the total savings this year, 650 million euros would be generated in the banking sector and 350 million euros in insurance.
The group would set aside a restructuring provision of 450 million euros after tax for compensation to those who lost their jobs.
Referring to the risk-reduction deal with the Dutch state, chairman Hommen said the bank was taking a "firm stride to reduce the risks on our balance sheet" and it much appreciated the action by the government "to restore confidence in the financial sector and stimulate the economy."
The group said that in the fourth quarter "conditions deteriorated sharply, making it the worst quarter for equity and credit markets in over half a century."
But commercial activity for the year had held up well, customer deposits increased and lending growth was generally strong.
Hommen said he was "disappointed" with the results and "additional action" to reduce risk and costs was needed. The bank "sincerely" regretted the job cuts but they were "essential" if ING were to adapt to the new environment.
The group had taken other steps to reduce asset risks, including substantial "hedging" programmes to provide a cushion against changes in values.
ING said that its focus on retail savings and investments was proving a solid foundation for its business.
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