ING Group cuts jobs, fires Tilmant

Bloomberg

The job cuts, equal to 5.4 percent of the workforce, are part of a plan to reduce operating expenses by 1 billion euros this year, Amsterdam-based ING said yesterday in a statement. Supervisory board Chairman Jan Hommen, a former chief financial officer at Royal Philips Electronics, will succeed the 56-year-old Tilmant.

ING rose the most in seven weeks in Amsterdam trading after saying it will transfer the risk on 80 percent of its 27.7 billion euros ($35.9 billion) in Alt-A mortgage securities to the Dutch government, limiting further writedowns. The company, which traces its roots to 1743, received a 10-billion-euro lifeline from the Dutch government last year, the first company to draw on a 20-billion-euro fund set aside to prop up financial firms.

"We view most of the announced measures as very positive," said Dirk Peeters, an analyst at KBC Securities in Brussels, in an e-mailed note. He advises investors to "buy" the shares. ING rose more than 22 percent, to 6.47 euros by 1:40 p.m. Turkish time yesterday. It has lost 73 percent of its value in the past 12 months.

The company will post a fourth-quarter pretax loss, excluding asset sales and special items, of 3.3 billion euros, because of writedowns on mortgage securities, debt and equities.

Earnings were hurt by 1.8 billion euros of writedowns on the Alt-A mortgage assets and by 700 million euros of equity impairments. The company’s loan-loss provisions increased to 600 million euros "reflecting worsening economic conditions," ING said.

ING in November posted its first third-quarter loss as it wrote down the value of stocks, bonds, mortgages and assets related to the bankruptcy of Lehman Brothers Holdings.