(Updates after Belgian workers threaten strike)
By Toby Sterling
AMSTERDAM Oct 3 ING Groep's plans to
shed 7,000 jobs and invest in its digital platforms to make
annual savings of 900 million euros ($1 billion) by 2021, drew
swift criticism from unions of the Netherlands' largest
financial services company 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 bank itself.
But they 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.
Labour unions were highly critical of the decision.
"I don't think this was the intention of the (government)
when it kept ING afloat with bailout money," Ike Wiersinga of
the Dutch CNV union said.
In Belgian, where the number of jobs lost will be highest,
labour leader Herman Vanderhaegen called the decision a "horror
show" in a statement published on the website of De Tijd, and
said workers would strike on Friday.
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 programmes 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.
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.
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
($1 = 0.8904 euros)
(Editing by Jon Boyle and Alexander Smith)