ING, the Dutch banking and insurance group, on Wednesday unveiled plans to invest €890m in its domestic retail banking operations, as it announced plans to extend internet banking into Japan and launched a €5bn share buy-back programme.
The developments are likely to be seen as evidence of a determination by ING to steer its own course through a period of consolidation in the financial services sector focused on its neighbour ABN Amro.
ING was among potential partners scouted by ABN Amro, but the deal failed to ignite. Wednesday’s announcements by the bankassurer suggest it is determined to push on alone.
While it retained an appetite for bolt-on acquisitions, demonstrated by an announcement that it was in exclusive talks to buy a Korean asset manager, ING’s decisions to extend online banking and invest heavily in its retail network were intended to remind rivals of its in-house firepower.
The company announced a five-year plan to combine its two domestic retail networks under the ING banner, scrapping the Postbank brand from 2009, cutting 2,500 jobs over five years and boosting revenues and savings by €440m annually from 2011 through economies of scale and increased efficiency.
The combined bank will have more than 8m Dutch retail customers.
The initiative came as ABN Amro is pursued by a trio of European banks including Fortis, the Belgo-Dutch bankassurer. A combination of those banks’ retail activities would squeeze ING in the Dutch market.
The decision to push ING Direct into Japan had been expected by analysts. The company has applied for a banking licence from Japan’s Financial Services Agency and plans to launch in the second-half this year.
Japan will be the 10th territory in which ING Direct operates, having launched a decade ago in Canada. It has 18.2m customers and €197bn of funds under management, and contributes 6 per cent of ING’s overall profit.
ING said the move was “in line with its strategy of entering large and mature markets with a developed infrastructure for direct banking”.
The 12-month share buy-back begins next month and involves 150m or 6.8 per cent of total ING shares.
Michel Tilmant, chief executive, said: “The buy-back will optimise the capital structure of the group, reduce the cost of capital and improve earnings per share.”
A flurry of annoucements was completed by news that ING had entered into exclusive talks with Morgan Stanley over plans to purchase an 88 per cent in Landmark Investment Management, a Korean asset manager.
The news came as ING reported a 5.6 per cent fall in first-quarter net profit, hurt by weaker banking results in the face of a “challenging interest rate environment”. Net income fell to €1.9bn from €2bn.
"Strong commercial growth helped compensate for a challenging interest rate environment in the first quarter," said Mr Tilmant.
ING shares added €0.09 to 33.28 in early Amsterdam trading.