ING plans to shed 7,000
jobs, invest in digital platform
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[October 03, 2016]
By Toby Sterling
AMSTERDAM
(Reuters) - ING Groep plans to shed 7,000 jobs and invest heavily in its
digital platforms to achieve annual savings of 900 million euros ($1
billion) by 2021, the Netherlands' largest financial services company
said on Monday.
The layoffs represent slightly less than 12 percent of ING's 52,000
workforce because nearly 1,000 are expected to come at suppliers rather
than the company itself.
The job losses are the heaviest since 2009, when ING was forced to
restructure and spin off its insurance activities after receiving a
state bailout during the financial crisis.
Although other large banks have announced mass layoffs at branch offices
in the past year to boost profitability, ING said the job cuts were
partly to combine technology platforms and risk control centres as well
to help it to contend with regulatory burdens and low interest rates.
"You have to announce these programs and these intentions at a time when
you can afford them," CEO Ralph Hamers told reporters on a conference
call. "We're strong right now, we have good results, we are growing and
then you have to do the repairs, and not when you don't have any choice
anymore."
ING said it would invest 800 million euros in its technology platform,
to be rolled out over the next five years in Spain, Italy, France,
Austria and the Czech Republic.
Those countries are mature, "challenger" markets, where there are
dominant incumbent banks and ING is looking to grow -- mostly by online
banking with few physical offices.
Hamers said that while three to four years ago banking digitalization
was taking off in a few northern European countries, it was now taking
off everywhere.
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Big
software companies like Google and Facebook had raised customer expectations in
all the countries in which ING are operating, he said.
ING
has had success, especially in Germany, with a business model focused on
maintaining little physical presence and conducting its retail business entirely
online, winning customers from Deutsche Bank.
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In the Netherlands and Benelux, where most of the job cuts will fall -- 3,500 in
Belgium and 2,300 in the Netherlands -- the company is integrating its Record
Bank subsidiary, Belgium's third largest pure retail bank, with ING.
The company plans to take 1.1 billion euros in charges, of which 1 billion euros
will be in the next quarter, for redundancies.
The company said it expected a Return on Equity of 10-13 percent through 2020 --
compared to 10.3 percent in the first half of 2016. But Hamers warned that might
not be achievable depending on rules for capital requirements still under
development.
(Editing by Jon Boyle)
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