Published February 13, 2013
AMSTERDAM – Dutch financial services group ING announced deeper job cuts in retail banking as it prepares to separate its banking and insurance operations under the terms of a state bailout.
ING is dismantling its once-fashionable bancassurer model after the 2008 bailout, divesting insurance and investment management and other assets through disposals or stock market listings as it prepares to repay the aid.
The group, which had already announced about 2,400 job cuts in November, said the new lay-offs at IT and call centers were needed to lower costs in its Dutch and Belgian retail banks.
Explaining the cost cuts, it said more of its customers were shifting their banking online.
Internet banking is well-established in the Netherlands and ING had been a market leader with its standalone online banks, ING Direct, in several markets.
"Customers are rapidly moving towards more digital environments, more online usage and less of the traditional approach, and we have to respond to that," Chief Financial Officer Patrick Flynn told Reuters. "Our more traditional retail entities in the Netherlands and Belgium are moving in the same direction now."
ING said it would cut 2,400 jobs in the Netherlands and Belgium, bringing lay-offs announced over the past 15 months to 7,500 - or roughly 9 percent of its workforce at the end of December.
It said this would save about 1 billion euros ($1.35 billion) in annual costs by 2015.
ING Chief Executive Jan Hommen, who declined to say whether he would retire from the bank this year, did not rule out further cuts. The Dutch firm's shares fell 1.5 percent after it released 2012 results and announced the cuts.
On Wednesday, ING reported fourth-quarter net profit of 1.434 billion euros ($1.93 billion), up 21 percent from a year ago thanks to gains from divestments but below a consensus analyst forecast of 1.587 billion euros.
Underlying pre-tax profit for ING's banking operations was 184 million euros, down 72 percent from a year ago, while the insurance unit swung from a loss of 1.51 billion euros to an underlying pre-tax profit of 272 million euros.
Analysts had expected the banking and insurance arms to report underlying profit of 290 million and 265 million respectively.
Many European banks are laying off workers and simplifying their activities after the financial crisis led to more conservative lending policies and forced them to bolster their capital to cover investment risks.
British bank Barclays said this week it would cut at least 3,700 jobs. Several other European lenders, including Deutsche Bank
(Reporting by Sara Webb; Editing by Tom Pfeiffer)