Finance Minister defends ING support plan
Dutch Finance Minister Wouter Bos defends controversial plan to inject more money into ING.
THE HAGUE—The Dutch Finance Minister Wouter Bos has defended his plan to give ING more government support. He says he cannot guarantee anything, but he expects the plan to generate more money than its costs. He also says one of his conditions for the plan is that the bank's bookkeeping is closely scrutinized.
Earlier the Dutch Lower House demanded an explanation from Bos following an announcement that the government is willing to guarantee 80 percent of a loss-making mortgage portfolio in the United States. The portfolio is worth 27 billion euros.
Socialist Party MP Ewout Irrgang fears tax payers will end up footing the bill. The conservative VVD is concerned about the consequences for the treasury. Even the Labour Party's coalition partners, the Christian Union and the Christian Democrats, want to know why this option was chosen. Only the finance minister's own Labour Party thinks it is a good move. Minister Bos says, "The risk was too big that the bank would collapse otherwise".
Unions are disappointed. Fearing job losses, they say the move is unacceptable. Shareholders, on the other hand, reacted positively. On Friday share prices reached an all time low following rumours that the bank would have to write off billions of euros. On Monday afternoon share prices shot up by 20 percent.
ING received 10 billion euros from the government last October "as an extra buffer" when the consequences of the credit crunch first became apparent. The latest measure has become necessary because of the poor state the current market is in. In response to the situation, ING has announced it will scrap 4200 insurance jobs across the globe and 2800 banking jobs. ING employs 125,000 people worldwide. It is not known exactly where the job losses will fall, but relatively few will be lost in the Netherlands, says Jan Hommen, the likely successor of the current CEO Michel Tilman.