Dutch giant ING axes 7,000 jobs as European banking sector tightens

ING said it will axe 7,000 jobs as it becomes the latest lender caught struggling to make profits in the current European banking environment.

The Dutch banking giant announced on 3 October that it would cut more than 13% of its worldwide workforce over the next five years as it focuses on investing €800m (£697m, $898m) in new technology and digital platforms.

It said the majority of the cuts will come in the Netherlands and Belgium, and are part of the group's Think Forward plan launched two years ago.

The move comes as European banks are buffeted by ultra low interest rates and a tougher regulatory environment. Lenders find it hard to make profits on loans when interest rates are low.

Shares in German lender Deutsche Bank sank to fresh 30-year lows last week, after the US Department of Justice (DoJ) proposed that Deutsche Bank pay a $14bn penalty to settle allegations of mis-selling mortgage securities in the run up to the financial crisis in 2008. It has previously announced plans to cut more than 9,000 jobs.

Last week Germany's second largest bank Commerzbank said it would axe 9,600 jobs and suspend dividend payouts "for the time being" due to low interest rates and weak client demand.

ING chief executive Ralph Hamers said: "Customers are increasingly digital and bank with us more and more through mobile devices."

"At the same time, banks are confronted with continuous regulatory burden and a prolonged period of ultra-low interest rates. These factors put pressure on the returns which are necessary to fund growth and investments, and cover our cost of capital."

The bank said it will cut around 3,500 jobs in Belgium and 2,300 in the Netherlands. It added that the group plans to book €1.1bn of charges for the redundancies, of which €1bn will fall in the final quarter of 2016.