ING Belgium has been given little rest. After a new intervention in its own branch network, the major bank is now also making significant cuts in the independent agencies. An important reason is that the profitability must be higher.
Peter Adams, who has been on board as CEO since the beginning of last year, is increasingly leaving his mark on ING Belgium. In recent days, the bank has informed the independent agents during internal information sessions that their number must more than halve in the coming year, from 448 to 200, De Tijd learned. This fits in with the strategic plan Route 2024. The new operation follows the major intervention at subsidiary Record Bank, the former separate self-employed network, which was completed in 2018.
- After years of changes and turbulence, ING Belgium is once again taking major steps.
- The number of independent agents must be more than halved.
- One of the important reasons is that the profitability must be higher.
ING has not disclosed how many branches will remain. That is still under study. “At best there will be 100 to 150 out of 311,” estimates a well-placed source. ‘After all, ING has announced that the average number of customers per branch should go from 5,000 to 15,000.’ At the end of last year, ING Belgium already (again) cut its own branch network. That should be halved to about 50 by the end of this year. In total, according to Route 2024, the bank wants to have 150 to 250 branches, about two-thirds less in ten years.
The bank says internally and in a response that the intervention will not affect the number of jobs. More than 800 employees work in the independent offices. According to our information, anyone working in an agency that is disappearing should be able to move to another independent branch.
Although not everyone believes that ING Belgium’s new plans have no social consequences. “Not every employee can or wants to transfer to a new office a few miles from where they live,” says one observer. The possible amalgamation of self-employed workers with their own offices is also not obvious due to the different wage policies: the allowances in the own offices are more favorable. On the other hand, the financial sector is also struggling with staff shortages.
Still stretching the numbers
The new intervention is exemplary for the evolution in the banking sector. The number of offices in our country has halved in the past eleven years. And the example of ING shows that the decline of the classic agency has not yet come to an end. Certainly now that the takeover of AXA Bank by Crelan will also lead to a thinning of the branch stock there. There is still some stretch in the Belgian figures: in 2020, our country was still well above the EU average for the number of offices per million inhabitants.
Route 2024 follows a difficult and sometimes turbulent period at ING. At the end of 2016, it announced a major cut in the number of jobs and offices. It also reported the closure of the separate self-employed network under the name Record Bank. The question is whether the new downsizing will not weigh on the service provision and the motivation of the staff. A source says that many people are already leaving spontaneously, especially to competitor Belfius, who are not always replaced.
ING does not want to give any figures in a response, but does confirm that it is holding talks with the representatives of the agents about ‘the footprint’ of the independent network. It also says that branches – both in-network and self-employed – will continue to play an important role at the bank and that they will work with larger (commercial) teams. For Route 2024, it points to the changing customer behavior and the ever faster digitization. But De Tijd learned that the announcement about the self-employed network mainly concerned a higher profitability.
Adams made it clear internally that the return on equity is now much too low. Various sources confirm that ING is also cutting commissions for the self-employed. These have to be cut by a quarter in one fell swoop after they have been systematically halved in recent years. ING also wants to use the latest intervention to cut the unprofitable independent branches. The bank only confirms that there will be an adjustment to the commission system.
Contrary to the restructuring of Record Bank, BZB-Fedafin, the professional association of banking and insurance intermediaries, was informed in advance this time about the intention to downsize the independent network. ‘We regret that barely four years after the integration of Record Bank, ING Belgium is again announcing a restructuring’, responds Albert Verlinden, chairman of BZB-Fedafin.
‘Many bank agents have not yet been able to recoup the investments that were required then and now suddenly there appears to be no more room for them. They will now have to buy customer portfolios again, with no guarantee that such a story will not come again within four years’, says Verlinden.
There is still a lot of uncertainty. More clarity may not be forthcoming until September. But for the professional association it is necessary that ING respects the code of conduct between banks and their agents and takes maximum measures to absorb the negative consequences for the independent bank agents as well as possible. ING Belgium has around 6,900 employees (in full-time equivalents) and recorded a net profit of 709 million euros last year.