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ING to cut 7,000 jobs

It will save nearly E1b in opex in 2009

Dutch financial services firm ING plans to cut approximately 7,000 full-time positions from its total workforce of about 130,000 people, to save nearly E1 billion in operating expenses in 2009.

The company said that the structural expense reduction will lead to annual savings of approximately E1.1 billion from 2010 onwards. Of the cutback, 35% will come from workforce reduction and the remainder comes from decreasing costs for the company’s head office, marketing, the Formula 1 programme, consultancy, third-party staff and the renegotiating of certain contracts with IT-vendors. Of the total expense reduction, E650 million will be realised in banking and E350 million in insurance.

The workforce measures will be made in accordance with local regulations and will be discussed with the respective stakeholders. A restructuring provision for severance costs of approximately E450 million after-tax will be booked of which two thirds in the first quarter of 2009 and the remainder in the second quarter.

Based on preliminary and unaudited figures, ING expects to report a net loss of E1 billion, after divestments and special items, for 2008, reflecting the effects of selling the insurance business in Taiwan and ending the pension operations in Argentina.

ING and the Dutch government have reportedly reached an agreement on an illiquid assets back-up facility covering 80% of ING’s Alt-A mortgage securities. Under the terms of the back-up facility, a full risk transfer to the Dutch state will be realised on 80% of ING’s E27.7 billion portfolio of Alt-A RMBS at ING Direct U.S. and ING Insurance Americas.

ING has also initiated measures to reduce exposure to several major other asset classes. Proprietary equity exposure has been reduced from E15.8 billion at the end of 2007 to E5.8 billion at 2008 year-end which consists of E1.9 billion in strategic banking stakes, including in Bank of Beijing and Kookmin.

Jan Hommen, chairman and CEO-designate of ING, said: Naturally, I am disappointed with our results in this extremely tough environment. With the continuing challenging outlook, we feel it is important to take additional action to decrease our risks and expenses. We sincerely regret the impact that some of the measures we are announcing today will have on our colleagues, but these steps are essential to adapt our organisation to the new business environment.