Tuesday, Jan 27, 2009


 
(This story was originally published Monday.)

By Nicolas Parasie and Robin van Daalen

Of DOW JONES NEWS WIRES

PARIS (Dow Jones)--ING Groep NV (ING) and BNP Paribas SA (13110.FR), two of Europe's largest financial services groups, Monday reported fourth-quarter losses and asked their governments for financial support.

Both companies blame the seizure of credit markets, accelerated by the collapse of Lehman Brothers Holdings and the deteriorating global economy for the disappointing results. Losses at BNP Paribas, which had been relatively unscathed throughout the crisis, show that few banks have been completely immune to the contagion of the credit crunch.

Amsterdam-based ING posted a EUR3.3 billion loss for the quarter, and cut 7,000 jobs, about 6% of its total workforce of 125,000. Its chief executive, Michel Tilmant, also stepped down. The chairman of ING's supervisory board, Jan Hommen, former chief financial officer of Royal Philips Electronics NV (PHG), will replace him, the bank said in a statement.

The bank said it would transfer to the Dutch state the bulk of its EUR30 billion Alt-A portfolio of mortgages, which are less risky than subprime, but more risky than prime-rated products. Investors embraced the transfer. At 1548 GMT, shares were up EUR1.51 or 28.6% to EUR6.79.

ING said its fourth-quarter earnings were hit by impairments, losses and negative revaluations totaling EUR5 billion as a result of sharply deteriorating markets, adding that it has been one of the worst quarters for equity and credit markets in more than a half a century.

However, analysts were surprised at how steep the loss was. "ING's fourth-quarter performance was much worse than expected," said Frank Stoffel, an analyst at Merrill Lynch said. He rates ING at neutral.

Tilmant could not be reached for comment, but in a letter to staff reviewed by Dow Jones Newswires, Tilmant said that "industry turmoil" and challenges for the financial sector had taken an "increasing toll" on him.

"It's clear that the environment we work in will continue to be challenging, and ING will need to face these challenges with renewed energy," he said. "After open discussions with the Supervisory Board, we have agreed that it is in the best interests of ING for me to hand over the reins to a new CEO."

BNP Paribas said that despite posting a EUR1.4 billion loss in the fourth quarter, it should book a net profit of EUR3 billion for the full year. It's also seeking EUR5.1 billion in fresh capital from the French government.

The losses stem mainly from its corporate and investment banking division, which lost around EUR2 billion in the quarter.

"The fourth quarter was marked by exceptionally violent movements in the capital markets, especially in the equity markets," the bank said.

The bank gave no new information on its outstanding EUR14.5 billion offer for several assets of Fortis NV, the Belgian-Dutch financial services group.

Shares in BNP Paribas were up 16.5% or EUR3.53, to EUR24.90. In the past three months the shares have lost more than 60% in value, with the uncertainty over the Fortis deal and the bank's ratios being the most widely cited reasons.

The bank plans to call an extraordinary general meeting to allow shareholders to vote on the proposal to issue preference shares to the government. These do not carry voting rights, but can be used to shore up the company's core Tier 1 capital. Simultaneously, the bank will repay the government for EUR2.55 billion in subordinated debt issued in December 2008 as part of the state's first banking support plan. As a result, the bank is gaining higher-quality capital.

The measures will lift the French bank's Tier 1 ratio, a measure of financial strength, to a proforma and more reassuring level of 8% from 7.5%.

-By Nicolas Parasie, Dow Jones Newswires; +33 1 40 17 1770; nicolas.parasie@dowjones.com

(Robin Van Daalen and Bart Koster in Amsterdam contributed to this report)

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27-01-09 0530GMT