ING CEO and 7,000 workers fall victim to €3.3 billion losses

After losing an estimated €3.3 billion in the last quarter of 2008, ING will lay off 7,000 employees, along with chief executive Michel Tilmant.

The Dutch firm said its decision to replace Tilmant had been made after "the worst quarter for equity and credit markets in over half a century", which saw it lose an expected €1 billion for the whole of 2008.

Jan Hommen, currently chairman of the supervisory board, will take over as chief executive after the next annual general meeting of shareholders, scheduled for April 27, 2009.

Until then, Eric Boyer, a member of the executive board, will be acting chief executive, while Tilmant will remain at the company as an adviser until his retirement from ING on August 1, 2009.

The cut of 7,000 full-time positions accounts for 35% of the €1 billion the firm plans to save in 2009 as part of its drive to reduce risk and expenses. Included in this are plans to limit exposure to major asset classes. For example, the firm reduced its proprietary equity exposure to €5.8 billion at year-end 2008 compared with €15.8 billion a year earlier.

Additionally, ING aims to reduce its balance sheet by 10% by decreasing the non-lending part by 25%, and decreasing the for sale portfolio as proceeds from maturing securities will be used to fund ING-originated loans.

ING will be helped by an agreement with the Dutch government for an Illiquid Assets Back-up Facility, which will cover 80% of the firm's €27.7 billion portfolio of Alt-A residential mortgage backed securities (RMBSs) from its US businesses - ING Direct USA and ING Insurance Americas. ING will remain the legal owner of 100% of the securities but will be exposed to only 20% of any results on the portfolio.

The firm blames its losses on impairments and fair-value adjustments on assets linked to the credit crunch, including a €2 billion loss on subprime RMBS, Alt-A RMBS and collateralised debt obligations, a €700 million loss on equity securities and a €300 million loss on debt securities.

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