Greek bond write-down pushes ING to axe 2,700 jobs
Sovereign debt deterioration forces the Dutch financial services group to reduce internal and external headcount
ING Group is slashing 2,700 jobs to shore up losses after a €467 million pre-tax write-down on Greek government bonds in its third quarter results.
Jan Hommen, CEO of ING Group, revealed that “as income is coming under pressure, we must renew efforts to reduce expenses across the group to adapt to the leaner environment and maintain our competitive position. In Retail Banking Netherlands, we are taking decisive steps to reduce costs by decreasing overhead and improving efficiency through operational excellence. It is inevitable that these measures will lead to redundancies.”
On Wednesday, the Dutch central bank slammed domestic banks, stating that they were inefficient and called for Dutch banks to cut costs.
The company’s earnings revealed that the bank’s underlying result before tax fell to €1 billion, while the net interest margin narrowed to 1.37%, primarily due to lower Financial Markets results.
Meanwhile, its cost of risk rose to €438 million, while operating expenses declined for the third straight quarter and were 2.9% lower year-on-year. The underlying cost/income ratio was 55.8%, excluding market impacts.
“The third quarter saw a marked deterioration on debt and equity markets amid a slowdown in the macro-economic environment and a deepening of the sovereign debt crisis in Europe,” says Hommen. ”We continued to take a prudent approach to risk, increasing hedging to preserve capital and selectively reducing exposures to southern Europe.”
However, while ING looks to reduce headcount across Dutch banking operations, Hommen revealed that the group was aiming to separate the insurance companies to eventually launch initial public offerings “when the markets recover”.
“Regulatory approvals are under way to create a separate holding company for our European and Asian insurance and investment management activities, and today [Thursday] we announced the creation of a management board for these operations,” says Hommen.