Full year 2008 net result for Dutch financial group ING is expected to be a loss of €1 billion after divestments and special items. As a result, ING will tap into a Dutch state guarantee for its troubled loan portfolio.
After what it said was worst quarter for equity and credit markets in over half a century, ING said it would post an underlying loss of 3.3 billion euros for the fourth quarter, including 2 billion euros in losses from its structured credit portfolio. It will also cut 7,000 jobs out of a total of about 130,000 worldwide.
In order to bolster its capital ratios, ING said the Dutch government would cover 80 percent of its 27.7 billion euros residential mortgage-backed securities (RMBS) in subprime mortgages, made to risky borrowers, and "Alt-A" loans, made to borrowers with a slightly better credit profile.
The Dutch government will take on the risk of the portfolio at a 10 percent discount to par value, and will receive 80 percent of cash generated from the portfolio.
ING also said Michel Tilmant, Chief Executive since 2004, would step down and would be replaced by board chairman Jan Hommen. Please click here to review the press release.