ING Group NV (NYSE: INV), the Dutch-based financial services company, said it will cut up to 2,700 jobs as a direct consequence of the European Union’s (EU) plan to write down 50 percent of Greek debt.
The planned reduction will slash headcount at its retail bank segment by 10 percent, according to Reuters.
ING Group specified that it will cut 2,000 full-time staff and 700 contract workers.
Two other major Dutch banks, ABN AMRO and Rabobank, have already unveiled significant job cuts.
ING Group shares are surging 7.61 percent in mid-morning trade in New York.
ING Group’s third-quarter results included a 467 million euro ($645 million) pre-tax write-down on its Greek government bond holdings.
The company also said it reduced its exposure to peripheral Euro Zone bonds by more than 5 billion euros ($6.9 billion).
“As income is coming under pressure, we must renew efforts to reduce expenses across the group to adapt to the leaner environment and maintain our competitive position,” Jan Hommen, ING Group’s chief executive, said in a statement.
“In Retail Banking Netherlands, we are taking decisive steps to reduce costs by decreasing overhead and improving efficiency through operational excellence. It is inevitable that these measures will lead to redundancies.”
The job cuts come one day after the De Nederlandsche Bank, the Dutch central bank, requested that domestic banks reduce costs and increase efficiency.
Hommen added: “The third quarter saw a marked deterioration on debt and equity markets amid a slowdown in the macro-economic environment and a deepening of the sovereign debt crisis in Europe. We continued to take a prudent approach to risk, increasing hedging to preserve capital and selectively reducing exposures to southern Europe.”
Cor Kluis, an analyst at Rabobank, wrote in a note: "The bank and the insurer results were good and we do not have to change our future earnings estimates. Their exposure to Portugal, Italy, Ireland, Greece and Spain has been well reduced to very manageable proportions.”
Separately, Hommen also announced that ING Group would eventually seek to separate its insurance through initial public offerings “when the markets recover.”
“Regulatory approvals are under way to create a separate holding company for our European and Asian insurance and investment management activities, and today [Thursday] we announced the creation of a management board for these operations,” he stated.
Palash has worked as a business journalist for 21 years in New York.