ING to Cut 7,000 Jobs in Cost-Savings Drive -- 2nd Update
October 03 2016 - 5:29AM
Dow Jones News
By Maarten van Tartwijk
AMSTERDAM-- ING Groep NV on Monday became the latest European
lender to announce a new round of layoffs and restructuring as it
battles ultralow interest rates and stricter regulations.
The lender said it would scrap around 7,000 jobs in the next
couple of years, of which 3,500 in Belgium and 2,300 in the
Netherlands. The cuts are aimed at saving EUR900 million ($1.01
billion) in annual costs by 2021 and represent around 13% of the
bank's global workforce. ING said it expects to take a pretax
"redundancy provision" of roughly EUR1.1 billion.
The measures are part of a wider overhaul in which ING aims to
converge its banking operations in Europe and move toward one
digital platform. It said it would invest EUR800 million to improve
its digital services.
Several European banks have announced restructuring plan or more
cautious financial targets in recent weeks as they grapple with a
combination of record-low interest rates, stricter tighter
regulation and a still sluggish economy.
Last week, Germany's Commerzbank AG said it would scrap around
20% of its workforce to restore profitability, while Spain's Banco
Santander SA downgraded two of its important financial targets in
light of the challenging environment. In the Netherlands, ABN Amro
Group NV is planning to cut more than 1,000 jobs.
"Banks are confronted with a continuous regulatory burden and a
prolonged period of ultralow interest rates," ING chief executive
Ralph Hamers said. "These factors put pressure on the returns which
are necessary to fund growth and investments and cover our cost of
capital."
Mr. Hamers said the latest measures are made "from a position of
strength," referring to previous restructuring that bolstered ING's
capital position and made it less complex.
Since the global financial crisis, when the bank received a
government bailout, it has embarked on a dramatic strategic
overhaul to transform itself into a smaller Europe-focused bank. It
now employs around 52,000 people compared with roughly 125,000 in
the years before the crisis.
ING, the Netherlands' largest bank by assets, reiterated its
target of achieving a core capital ratio of more than 12.5% and a
leverage ratio of more than 4%. But it said it would not update its
return on equity target, a key measure of profitability, due to
"continuing regulatory uncertainty." The bank currently targets a
return of 10% to 13%.
The move comes amid a debate in the Netherlands on whether banks
have set goals that are too ambitious after a study by the Dutch
central bank concluded that their double-digit targets may no
longer be feasible with new capital requirements on the
horizon.
Mr. Hamers said he doesn't necessarily agree with the central
bank's views and said investors demand "decent returns." He said
ING still aims to pay a "progressive dividend over time."
Write to Maarten van Tartwijk at maarten.vantartwijk@wsj.com
(END) Dow Jones Newswires
October 03, 2016 05:14 ET (09:14 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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