ING Posts Third Consecutive Quarterly Loss After Writedowns

ING Posts Third Consecutive Quarterly Loss After Writedowns


May 13 (Bloomberg) -- ING Groep NV, the largest Dutch financial-services company, posted a third consecutive quarterly loss because of equity writedowns, higher loan-loss provisions and reorganization costs.

The first-quarter net loss was 793 million euros ($1.08 million), compared with a 1.54 billion-euro profit a year earlier, Amsterdam-based ING said today in a statement. That missed the 524 million-euro loss median estimate of 10 analysts surveyed by Bloomberg News. The company had a loss of about 4.2 billion euros over the previous two quarters.

ING, which traces its roots to 1743, plans to raise as much as 8 billion euros selling assets to boost capital and is cutting 7,000 jobs in a bid to reduce operating costs by 1 billion euros this year. ING said last month it expects to sell as many as 15 businesses “as market conditions permit.”

“On paper, the plans are good, but the question when realizing them is whether that’s still evident,” Dirk Peeters, a Brussels-based analyst at KBC Securities who rates ING a “buy,” said in an interview before the results were released. “Who wants to buy?”

Chief Executive Officer Jan Hommen, who presented ING’s new strategy last month after replacing Michel Tilmant on Jan. 26, expects the asset sales to free up about 4 billion euros in capital.

Government Lifeline

ING’s plan coincides with efforts by U.S. banks to raise $37 billion to fill capital shortfalls or repay the Treasury’s bailout fund after getting the results of a government stress test. The test found that 10 lenders needed to raise a total of $74.6 billion in capital and that a deeper recession could lead to potential losses of $599.2 billion in 2009 and 2010 for the 19 lenders examined.

ING, created in the 1991 merger of Nationale-Nederlanden and NMB Postbank Group, received a 10 billion-euro government lifeline in October and transferred the risk on most Alt-A mortgage assets to the Dutch state.

Financial companies worldwide have announced more than 310,000 job cuts after $1.41 trillion of writedowns and credit losses since the start of 2007.

ING already raised 1.4 billion euros in February by selling its 70 percent stake in ING Canada Inc., the country’s largest property and casualty insurer. The plan also includes concentrating the banking business on operations in the Benelux region, as well as Poland, Romania and Turkey.

Investment Management

ING plans to integrate its investment-management units in Europe, the Americas and Asia and include real-estate investment management. In the U.S., ING will explore “strategic options” for its employee benefits, group reinsurance and existing annuities book, the company said.

In insurance, ING will focus on life and retirement services in the Benelux countries, central Europe, the U.S., Latin America and Asia. The life insurance activities in China and Japan are under review.

BLOOMBERG