Dutch bank ING is to axe 7000 staff, renegotiate IT contracts and pull out of a planned launch of its direct banking operation in Japan after filing a loss of EUR1 billion for 2008.
The move to cut costs comes as ING posts a EUR3.3 billion loss for the third quarter and removes its CEO Michel Tilman "in light of the extraordinary developments over the past few months and given his personal condition". Tilman's role will be filled by Jan Hommen, currently chairman of the supervisory board of ING Group.
After what it said was "the worst quarter for equity and credit markets in over half a century", the bank has additionally agreed to tap into EUR22 billion of Dutch state loan guarantees for its troubled loan portfolio.
ING says it will axe 7000 full-time positions in an effort to cut operating expenses by EUR 1 billion in 2009. Further restructuring will lead to annual savings of approximately EUR 1.1 billion from 2010 onwards. Planned measures include savings in "head office, marketing, the Formula 1 program, consultancy, third-party staff and the renegotiating of certain contracts with IT-vendors.
ING has also suspended plans to launch its ING Direct banking service in Japan, a project it had planned to launch in 2008 pending regulatory approval.
The bank says it is reviewing expenses in greenfield operations in general and will seek to shed non-core business units.
Of the total expense reduction, EUR 650 million will be realised in banking and EUR350 million in insurance.
In return for state funding, ING has agreed to boost its lending to consumers and businesses by EUR25 billion euros and cancel management bonuses for 2009 and beyond until a new remuneration policy is set.