The Dutch government has announced that it will inject €10 billion (CDN$15.8 billion) into ING Groep in exchange for an 8.5% stake in the company, after projected third-quarter losses drove the stock to a 13-year low.
The move follows a government announcement on Oct. 9 to make €20 billion of capital available to financial enterprises that are fundamentally sound and viable.
“Our capital position was in line with previously targeted levels and regulatory requirements,” says Michel Tilmant, chief executive officer of ING. “However, market conditions have changed dramatically in recent weeks and have led to an internationally recognized belief that going forward, in this market environment, capital requirements for financial institutions should be higher.”
As part of the agreement, the Dutch government will name two members to ING’s supervisory board, and the company is canceling dividends for the rest of the year.
ING’s stock fell 27% on Friday with rumours that it was short on capital, followed by the announcement of an expected €500 million (CDN$794) loss for the third quarter.
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American, U.K. Firms Unprepared for Downturn
Prior to the current financial crisis, one in five U.K. companies lacked contingency plans for managing their workforce during an economic downturn, according to a survey.
Watson Wyatt’s 2008 Global Strategic Reward survey of 1,389 organizations across 37 countries found that 79% of U.K. companies had contingency plans in place by the summer of 2008, compared to 80% Europe-wide and 67% in the U.S.
In comparison, 100% of French respondents had made contingency plans, as had 87% of German firms, 85% of Irish firms and 82% of Italian firms. Spain came in last, with only 57% of firms having contingency plans in place.
“Whether or not they made plans for managing their workforce before the current financial turmoil, organizations should now be concentrating on preparing the ground for a potentially troubled future,” says Carole Hathaway, head of European strategic reward with Watson Wyatt.
According to the survey, organizational restructuring is the most popular contingency plan, at 92% in the U.K., 70% across Europe and 69% in the U.S. A freeze on hiring was the second most likely, at 58% in the U.K., 63% across Europe and 58% in the U.S., followed by layoffs at 55% in the U.K. and across Europe, and 77% in the U.S.