The Dutch financial services company will lay off 2,350 employees after a Q3 slump of 64 percent.
The largest Dutch financial services company, ING Groep, has announced that it will be slashing 2,350 employees from its rosters – 1,350 European insurance jobs, and 1,000 commercial banking positions – due to a slump in their profits from the third quarter of 64 percent.
The company’s net income plummeted to €609 million, from having been €1.69 billion a year before.
The lender, which is based in Amsterdam, released a banking and insurance news statement that showed that they fell short of the €846 million median estimates that had been projected by nine Bloomberg-surveyed analysts. This has required them to begin cutting bank and insurance jobs in order to help them to recover.
These insurance jobs will be cut by 2014, said the company in its news release.
According to ING, the profits started to tumble after they experienced hedge losses that had been used for protecting the capital of the insurer. It also suffered from a charge that was connected with its U.S. annuity unit.
Jan Hommen, the chief executive officer, has now been ordered to sell the company’s insurance unit operations by the closer of 2013, following a bailout of €10 billion by the E.U. Now, in preparation for selling the that unit’s shares, it will be cutting the insurance jobs in order to generate a total savings of €460 million in 2015.
As a whole, the insurance industry has accepted this step as an appropriate form of business step in order to prepare the European unit for its sale. Many of the insurance jobs – especially in their IT support areas – were exceptionally costly, so shedding them is an important step to improve efficiency before the divestment of the unit.
According to ING, the banking and insurance job cuts will generate a charge of approximately €150 million in Q4 2012. Over the next three years, a similar provision will be sparked by decreases in commercial banking.
At the moment, there are 12,000 European investment management and insurance jobs, as well as 10,500 global commercial positions at ING.