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ING cuts 7,000 jobs

The Dutch bank, with €72bn of real estate assets under management globally, has also parted company with its chief executive after revealing a €1bn loss during 2008.

ING is taking the axe to 7,000 jobs as part of a move to save €1 billion in costs this year.

The Netherlands-based financial company, which manages €72 billion of real estate assets globally, admitted today it expected to make a €1 billion annual loss following divestments and asset write-downs. The bank particularly suffered in the fourth quarter, with preliminary losses of €3.3 billion. Its chief executive, Michel Tilmant, is stepping down to be replaced by Jan Hommen, currently chairmen of the supervisory board.

Results were impacted by impairments and losses on “pressurized” assets, such as subprime residential mortgage-backed securities, the firm said. In order to save €1 billion a year, ING said it would cut 7,000 full time positions, accounting for 35 percent of the savings the firm wants to make. As part of its capital restructuring, the Dutch government is assuming 80 percent of risk and payments from certain securities in exchange for an annual payment to ING of approximately €600 million.

The group also stated there would be job cuts in the real estate business. It said global real estate markets had been hit hard by the financial crisis. “In response, we have examined our business model which we built for growth and concluded that we need to reduce our cost base. This will happen in a number of ways, through reducing our out of pocket expenses, continuing a headcount freeze – in place for some time now, and reluctantly, continuing to lay-off people.”

ING’s real estate investment management wing decided to launch an opportunity fund in 2007 alongside its other real estate vehicles. Last October the US arm, ING Clarion, said it was growing its debt platform, and targeting $1 billion for the ING Clarion Debt Opportunity Fund III.

And in an interview with PERE, ING Clarion chairman and chief executive officer, Steve Furnary said the firm was eying long-term opportunities in emerging economies in Latin America, including Peru, Argentina and Chile following on from the opening of an office in Sao Paolo recently.

He also said the US would play a key part in ING Clarion's strategy over the coming 12 to 24 months, saying distressed land, broken debt and development deals, as well as recapitalizations of land and development projects, were being “actively” considered by the firm, although no deal had been closed to date.

Today, ING said it was taking measures to counter the challenging economic and market conditions. “In order to adapt the organisation to the new business environment, ING is taking several steps to reduce risk and expenses and increase focus on its core savings and investment business,” it added in a statement.