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(snip)But CEO Jan Hommen of ING Group made statements on Business News Radio () and Dutch public news radio Radio1 () this morning. I took the most telling quotes of these interviews:
Hommen (translated and summarized from Dutch to English):
“The profit of €1.7 bln is indeed large, but €560 mln of this were one-off book profits from the sale of company parts. If you deduct this, about €1.1 bln is remaining. Although the insurancy group is doing fine, the banking business is becoming less profitable.
The financing costs are higher and there are additional expenses, due to new supervisor regulation. Also the customers changed their demand for products and services. These circumstances made lay-off in retail banking inevitable.
ING made a substantial haircut of 60% on its Greek investments to the amount of €467 mln in Q3, maintaining a 40% valuation for the remaining Greek exposure for all maturing dates, inclusive 2020 and later.
Trust in the international banking business is still very hard to find. Nevertheless we managed to completely fulfill our financing needs for 2011 and already partially for 2012.
Although the authorities make it harder and harder to supply loans to private customers, we still managed in Q3 to supply €8 bln in credit and loans to private and corporate customers”.
I understand Hommen and I understand his tough decision to lay-off 2700 jobs. The banking industry made an almost total change from ‘banking at the bank’ to ‘banking at home’ during the last decade. For 75% of bank services you don’t have to leave your home anymore.
Now that the interest margins are decreasing and it is becoming tougher to supply loans to private and corporate customers, I think Hommen made the right decision to lay-off those people, no matter how hard this may seem.
And although the exposure to Greece has been minimized by ING, I really doubt if this is true for the exposure to Spain and Italy. People should not forget that the exposure of the Dutch banks to Greece was ‘peanuts’, compared to the exposure to Italy (€8.8bln), Ireland (€26.5bln) and Spain (€24.6bln). And then don’t even mention France (€46.9bln) (snip)
Not meaning to 'fear monger', but perhaps a reminder is in order that ING is indeed a Dutch bank ... with major exposure to PIIG debt ... that has zero physical bank branches in North America where you might walk in and withdraw your money !
Yes, at the moment, ING accounts are accessible through certain North American ATM's. However, if 'trouble' were to start, that ATM access could be cut off in a millisecond.
And yes, ING savings, checking and CD accounts for US customers are indeed insured by the FDIC. However, if 'trouble' were to start, it could take months or years before the FDIC actually makes good.
Also, it's extremely coincidental that ING's 'distress' has hit the news at the same time as ...
(snip)"CHICAGO -(Dow Jones)- If you've been thinking about firing your bank, now might be the time. A handful of grassroots groups are mobilizing people to abandon megabanks for what one organizer calls "more friendly" smaller banks and credit unions.
Show time is Saturday, Nov. 5, dubbed "Bank Transfer Day" by its organizer, Kristen Christian, an art-gallery owner in California who started a Facebook movement after a handful of banks, most notably Bank of America (BAC), attempted to slap fees on debit-card use. Her movement has garnered support from consumer-advocacy groups and pressured big banks to kill debit-card fee plans.
Meanwhile, an estimated 650,000 consumers have joined credit unions nationwide since Sept. 29, according to a statement on Thursday from the Credit Union National Association or CUNA, a credit-union advocacy group. That's the day Bank of America announced its debit-card fee.
Credit unions saw savings-account deposits grow by $4.5 billion in that time, "likely from the new members and existing members shifting their funds," CUNA said.(snip)
While the 'obvious' reason originally motivating 'Bank Transfer Day' dealt with the big banks imposing transaction fees and otherwise treating 'small time' customers ( i.e. < $20- $50,000 ) as 'disposable', there is also an unpublicized but increasingly important reason. With a regional bank or credit union, one can be reasonably confident that these local financial institutions are NOT mixed up in PIIG debt, CDO counterparty risk, 'musical money' ( a la MF Global's supposed accounts in European banks co-mingling investor funds ) etc.
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