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ING may not pay dividend this year on second straight loss
By Martijn van der Starre |
February 19, 2009, Thursday
|
Print Edition
Print Edition
ING Groep NV, the first Dutch bank and insurer to tap a government rescue package, may not pay a dividend this year after posting its second consecutive quarterly loss.
The fourth-quarter loss was 3.71 billion euros (US$4.68 billion), or 1.82 euros a share, the Amsterdam-based company said yesterday in a statement. That was less than the 3.9-billion-euro loss it forecast last month and compared with net income of 2.48 billion euros, or 1.18 euros, a year earlier.
ING, which traces its roots to 1743, is cutting 7,000 jobs in a bid to reduce operating costs by 1 billion euros this year. Following total writedowns of 3 billion euros in the fourth quarter, the company is transferring the risk on most Alt-A mortgage assets to the Netherlands and focusing on fewer businesses and markets.
"Our top priorities this year are to further reduce asset exposure and rationalize the cost base," supervisory board Chairman and Chief Executive Officer-designate Jan Hommen said in the statement. The company added that given the intensity of the crisis, "it is difficult to foresee whether ING will be in a position to pay a dividend in 2009."
Stock drops
ING dropped as much as 2.7 percent in Amsterdam trading and was 1.4 percent lower at 5.10 euros at 9:19am yesterday. The stock has dropped 30 percent this year, paring the company's value to 10.5 billion euros.
ING said last month that Hommen, a former chief financial officer at Royal Philips Electronics NV, will replace Michel Tilmant as CEO. Hommen said on January 26 he will stay "as long as necessary" and make sure the company is in "solid shape" when he leaves.
Financial institutions worldwide have posted more than US$1 trillion of credit losses and markdowns since the start of last year, according to data compiled by Bloomberg News.
ING said about 1,400 jobs will be cut in wholesale banking, with 800 going at its retail unit and another 600 at ING Direct. The Americas will bear the brunt of job cuts at its insurance business with about 2,400 losses. There will be a reduction of 1,100 in Europe and 700 in the Asia-Pacific region.
Solid foundation
"Our basic strategy, based on retail savings and investments, is a solid foundation for the future, but we must reduce the complexity of the group," said ING, which will review its businesses over the coming months. Hommen declined to comment on future asset sales.
"This in line with our view that over time, ING will increasingly morph into a Benelux-focused banking group," Frank Stoffel, a London-based analyst at Bank of America Corp's Merrill Lynch & Co, wrote in a note to investors. Stoffel rates ING "neutral."
The company said on February 4 it plans to sell its 70-percent stake in ING Canada Inc and raise as much as C$2.16 billion (US$1.71 billion) to shore up its balance sheet.
ING may create as much as 3 billion euros by selling units, Hommen said last month.
ING will transfer the risk on 80 percent of its 27.7 billion euros of Alt-A mortgage securities to the Dutch government, it said last month. The company received a 10-billion-euro lifeline from the Netherlands in October last year.
The fourth-quarter loss was 3.71 billion euros (US$4.68 billion), or 1.82 euros a share, the Amsterdam-based company said yesterday in a statement. That was less than the 3.9-billion-euro loss it forecast last month and compared with net income of 2.48 billion euros, or 1.18 euros, a year earlier.
ING, which traces its roots to 1743, is cutting 7,000 jobs in a bid to reduce operating costs by 1 billion euros this year. Following total writedowns of 3 billion euros in the fourth quarter, the company is transferring the risk on most Alt-A mortgage assets to the Netherlands and focusing on fewer businesses and markets.
"Our top priorities this year are to further reduce asset exposure and rationalize the cost base," supervisory board Chairman and Chief Executive Officer-designate Jan Hommen said in the statement. The company added that given the intensity of the crisis, "it is difficult to foresee whether ING will be in a position to pay a dividend in 2009."
Stock drops
ING dropped as much as 2.7 percent in Amsterdam trading and was 1.4 percent lower at 5.10 euros at 9:19am yesterday. The stock has dropped 30 percent this year, paring the company's value to 10.5 billion euros.
ING said last month that Hommen, a former chief financial officer at Royal Philips Electronics NV, will replace Michel Tilmant as CEO. Hommen said on January 26 he will stay "as long as necessary" and make sure the company is in "solid shape" when he leaves.
Financial institutions worldwide have posted more than US$1 trillion of credit losses and markdowns since the start of last year, according to data compiled by Bloomberg News.
ING said about 1,400 jobs will be cut in wholesale banking, with 800 going at its retail unit and another 600 at ING Direct. The Americas will bear the brunt of job cuts at its insurance business with about 2,400 losses. There will be a reduction of 1,100 in Europe and 700 in the Asia-Pacific region.
Solid foundation
"Our basic strategy, based on retail savings and investments, is a solid foundation for the future, but we must reduce the complexity of the group," said ING, which will review its businesses over the coming months. Hommen declined to comment on future asset sales.
"This in line with our view that over time, ING will increasingly morph into a Benelux-focused banking group," Frank Stoffel, a London-based analyst at Bank of America Corp's Merrill Lynch & Co, wrote in a note to investors. Stoffel rates ING "neutral."
The company said on February 4 it plans to sell its 70-percent stake in ING Canada Inc and raise as much as C$2.16 billion (US$1.71 billion) to shore up its balance sheet.
ING may create as much as 3 billion euros by selling units, Hommen said last month.
ING will transfer the risk on 80 percent of its 27.7 billion euros of Alt-A mortgage securities to the Dutch government, it said last month. The company received a 10-billion-euro lifeline from the Netherlands in October last year.
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