ING Group NV, the Dutch financial services company with major operations in Hartford, reported today a net loss of $3.9 billion for the fourth quarter of 2008 and said it planned to cut operating costs by $1.3 billion in 2009.
In January, the company based in Amsterdam, Netherlands, had warned markets it expected a loss for the quarter of $4.2 billion and Chief Executive Officer Michel Tilmant had resigned.
The shortfall consisted of a $1.3 billion loss at ING’s banking arm, mostly due to increasing provisions for bad loans, and a $2.6 billion loss at its insurance arm, primarily due to investments gone sour.
Incoming CEO Jan Hommen said the company had been geared for growth in 2008 and was “overtaken by the pace and severity of the downturn in the fourth quarter that eroded our earnings and our equity.”
Hommen, a former chief financial officer at electronics company Philips and aluminum company Alcoa, said that after assistance from the Dutch state, the company’s tier 1 capital ratio – the most widely used measure of a bank’s solvency – was 9.3 percent at year end.
ING has cut two deals with the Dutch government. Last year it received a $12.6 billion investment lifeline. In January the state assumed most of the risk for $35.8 billion in troubled U.S. mortgage-backed securities ING owns.
“Our top priorities this year are to further reduce asset exposure and rationalize (reduce) the cost base,” Hommen said in a statement. He said the company would reduce loans by 10 percent from September levels, and cut expenses by $1.3 billion by year-end.
ING announced 7,000 job cuts in January, representing 5 percent of its total work force.
At 11 a.m., ING traded at $6.05, down 68 cents, or 10.1 percent. (AP)
