ING is pursuing the same trend on the Romanian market as at group level – a return to basic services – and, apart from its stock exchange brokerage, is also giving up leasing, while factoring will be integrated into ING Bank, but the commercial bank structure will grow further based on a plan meant to boost the market share and the portfolio of clients, and to expand the range of products and services, said Misu Negritoiu, who as of September 1 has become chairman of ING Bank Romania after a six-year term as a chief executive officer (CEO).
“ING as a bank is developing in Romania, it is not narrowing down its activity. The closure of the equity business has nothing to do with the bank’s future development,” he said. There is a three-year plan of moderate growth with an emphasis on improving processes, the quality of products, security and efficiency.
“ING is currently very well rooted in the Romanian market and is not giving up. The difference is that the new ING is a pan-European commercial bank, not an investment banking one, with a focus on Benelux, Germany, Poland, Romania and Turkey,” explained Negritoiu, who has run ING’s local business through the years of economic boom and the toughest crisis years.
In mid June 2012, the Dutch bank announced that Negritoiu would be replaced as CEO of the bank by Polish-born Michal Szczurek, who took the job in September, and Negritoiu became chairman.
Negritoiu said ING’s decision to withdraw from the Bucharest stock exchange, which became public two weeks ago, should not have come as a surprise. He explained that several factors led to this decision – the situation of the local market, the recession, the restructuring of banks in general and of the ING group in particular.
“Because we are a universal bank in Romania, we could have fought to hold on to the equity markets department if the local market had helped us, if it had shown potential like the Polish market, where this business segment was kept. But why stay? There’s not much privatizing to do, Oltchim’s listing wasn’t given a chance, we practically could not justify keeping this business. Azomures was a marginal transaction and at Fondul Proprietatea we went just to be in the market, all in all this was a business that lacked predictability.”
Negritoiu built ING Securities shortly after he came into the bank 15 years ago and says he is emotionally attached to this entity.
“ING is part of my banking career. I started investment banking, I built ING Securities and ultimately they disappeared. Emotionally I am very attached to these structures, but from a market perspective giving them up is a very objective process.”
He reminds that ING Group removed the real estate segment and investment funds from its portfolio, is separating insurance operations from banking ones and is giving up investment banking globally after three years ago it took a “back to basics” approach, focusing on delivering basic banking services.
He says it has become more important for a commercial bank to meet capital adequacy ratios, have liquidity and provide services to as large a number of individual clients and companies as possible rather than be present on the investment banking market and on the equity market.
“We at our equity business struggled for years and we were still on the edge. We were very cost-efficient, but we were still on the edge. We weren’t losing money, but it was not a business with good prospects, either. ING is the last global player to leave the market.”
As part of the adjustment of the local business to suit the group’s strategy, ING also decided to withdraw from the local leasing market and close down ING Lease.
“We sought to integrate this business into the bank, but the legacy was too costly. The company entered the market in full economic boom and in recession paid too high a price because of its exposure to the real estate market, as well as to truck fleets and construction equipment,” Negritoiu explained.
The existing contracts will be pursued until maturity and the leasing offer will be replaced through banking loans.
Factoring services provided through ING Commercial Finance will be integrated into the bank.
Negritoiu says ING’s plan is for the local bank to develop further, completely unrelated to the political dialogue between Bucharest and Amsterdam, which has been tense lately because as the Netherlands opposes Romania joining the Schengen area.
“The Dutch government is pragmatic, it doesn’t have a problem with Romania, it has principle-related problems, to do with meeting certain criteria, with vulnerabilities and a political balance on the domestic scene. (…) The approach is purely pragmatic, not sentimental as it is here – I hate or love a partner.”
Net profit of over EUR25 million in 1H
ING Bank Romania ended the first half of this year with a net profit of EUR25.6 million, accounting for more than 63% of the profit made in 2011 as a whole, while the bank’s revenues amounted to EUR99 million.
The profit made in the first half of 2012 rivals the result reported at the end of 2008, the last year of economic boom. During that time ING was still making investments to expand its retail segment in order to reach the 1 million-client mark and become a universal bank.
The Dutch bank managed to achieve one million clients in 2010 in full recession, doubling its portfolio against 2007. 2011 came with a slight decline, but not below the one million-client mark.
ING’s revenues pursued an upward trend throughout the crisis, but conservative practices related to setting up provisions for problematic loans put pressure on the net profit to a low of EUR15.3 million in 2009. The profit then recovered fast to over EUR40 million in 2011 as provision costs relaxed.
(English version by Daniela Stoican)