MercoPress. South Atlantic News Agency

ING group to split banking and life insurance operations

CEO Hommen was named following the bail out operation

Dutch ING Group on Monday announced that it will move towards a complete separation of its banking and life insurance operations. ING which was bailed out by the Dutch government said it would dispose of its insurance operations over the next four years and raising 7.5 billion Euros in a rights issue.

The restructuring is part of a deal with the European Commission following the 10 billion Eros of state aid ING received to help it through the global financial crisis.

The move will leave the company's balance sheet 30% smaller than before the bail-out. ING said it would be “predominantly focused on Europe with selective growth options elsewhere”.

The company was set up 18 years ago and its dismantling was not expected so early. ING is reported to be acting early to head off the findings of an EU probe into the legality of its state aid.

The restructuring is the latest move in ING' Back to Basics program, which has led to 10,800 job cuts so far this year.

“The complexity of ING did not help us during the crisis” CEO Jan Hommen said on Monday. However he defended the bank's model, saying “banc-assurance” was a proven and viable business strategy even as he moved to split the business up.

Before ING, he was well known as a chief financial officer with a talent for controlling costs, first at aluminium giant Alcoa and then at Royal Philips Electronics.

“A little over one year ago, ING began to experience the direct impact of the financial crisis, resulting in two instances of government support to strengthen our capital position and to mitigate risk. Over the last six months, we have worked tirelessly - both inside ING and with the Dutch Government and the European Commission - to devise a plan that will enable us to pay back the Dutch State, address the EC's requirements for viability and fair competition, and return our focus to the business and what matters most to our customers. We recognize the considerable efforts of the Dutch Government and the EC, and are pleased to have achieved understandings with them about how we will move forward” said CEO Hommen.