ING Groep NV, the first Dutch bank to tap a government rescue package, asked 1,200 workers including its 200 “top employees” to return last year’s bonuses, joining rivals including UBS AG in cutting pay to assuage taxpayer criticism.
The Amsterdam-based bank also deferred 2009 variable cash compensation for all workers until a new policy is established next year, it said in a message to employees and obtained by Bloomberg News on Monday.
“Given the continuing public scrutiny of variable pay practices in our industry, ING is moving to align its variable compensation practices with the new reality,” it said.
Banks are calling on executives to forfeit bonuses amid growing public criticism. Societe Generale SA, France’s third- largest bank, said yesterday senior executives would return their stock options in response to public “indignation,” while UBS reduced bonuses after a $59.2 billion lifeline from the Swiss government. New York-based American International Group Inc, which received a $173 billion federal bailout, sparked an outcry by paying $165 million in bonuses this month. President Barack Obama has called the payments “the height of irresponsibility.”
ING, which received a ¤10 billion lifeline in October and is transferring the risk on most Alt-A mortgage assets to the government, paid ¤300 million in bonuses for 2008.
“In this environment, we must show how seriously we take this matter,” Jan Hommen, chief executive officer designate, said in the message. “Most important, we must put this issue behind us so we can focus on what matters most, our customers and how we take the company forward.”
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ING rose 18 per cent to ¤5.11 as of 12.19 pm in Amsterdam, paring its decline this year to 30 per cent. That values the financial-services company at ¤10.5 billion.
The Dutch newspaper De Volkskrant today reported ING asked its top 1,200 employees to return their 2008 bonuses.
The bank said earlier this month that the 2008 bonus total had been cut by more than half, joining rivals such as Morgan Stanley and Deutsche Bank AG that are reducing payments to employees after the banking industry racked up more than $1 trillion of losses and writedowns.
ING employees at all levels of the company have offered to forgo variable cash compensation for 2008. “Given the response from employees, I have asked my top 200 leaders and their direct reports to consider whether they accept their 2008 cash pay,” Hommen’s message to staff said.
“This is strictly voluntary, targeting the senior levels of the organisation,” Hommen said.
ING spokesman Nanne Bos declined to comment on how much in variable cash compensation the 200 management council members and their 1,000 team members received last year.
Dutch Finance Minister Wouter Bos will investigate whether he can block 2009 bonuses at financial companies receiving government aid, he said in a letter sent to parliament today.
ING, created in the 1991 merger of Nationale-Nederlanden and NMB Postbank Group, is cutting 7,000 jobs to reduce operating costs by 1 billion euros this year and is reviewing which divisions it may sell in the coming months. The company posted a fourth-quarter loss of 3.71 billion euros last month.