ING Seeks Return of Bonuses to Stem Taxpayer Anger

March 23 (Bloomberg) –

ING Groep NV, the first Dutch bank to tap a government rescue package, asked 1,200 workers including its 200 “top employees” to return last year’s bonuses, joining rivals including UBS AG in cutting pay to assuage taxpayer criticism.

The bank also deferred 2009 variable cash compensation for all workers until a new policy is established next year, it said in a message to employees and obtained by Bloomberg News today.

“Given the continuing public scrutiny of variable pay practices in our industry, ING is moving to align its variable compensation practices with the new reality,” it said.

Banks are calling on executives to forfeit bonuses amid growing public criticism. Societe Generale SA, France’s third- largest bank, said yesterday senior executives would return their stock options in response to public “indignation,” while UBS reduced bonuses after a $59.2 billion lifeline from the Swiss government. New York-based American International Group Inc., which received a $173 billion federal bailout, sparked an outcry by paying $165 million in bonuses this month. President Barack Obama has called the payments “the height of irresponsibility.”

Amsterdam-based ING, which received a 10 billion-euro ($13.5 billion) lifeline in October and is transferring the risk on most Alt-A mortgage assets to the government, paid 300 million euros in bonuses for 2008.

“ING had to act,” said Yolande van den Dungen, an equities manager at SPF Beheer BV in the Dutch city of Utrecht, who helps oversee about $2 billion, including ING shares. “The compensation system for the coming years needs to be reviewed and changed, at ING and elsewhere.”

Shares Rise

ING rose 17 percent to 5.09 euros in Amsterdam, paring its decline this year to 31 percent. That values the financial- services company at 10.5 billion euros.

“In this environment, we must show how seriously we take this matter,” Jan Hommen, chief executive officer designate, said in the message. “Most important, we must put this issue behind us so we can focus on what matters most, our customers and how we take the company forward.”

The Dutch newspaper De Volkskrant today reported ING asked its top 1,200 employees to return their 2008 bonuses.

The bank said earlier this month that the 2008 bonus total had been cut by more than half, joining an industry trend of reducing payments after worldwide losses and writedowns of almost $1.3 trillion.

‘Strictly Voluntary’

ING employees at all levels of the company have offered to forgo variable cash compensation for 2008. “Given the response from employees, I have asked my top 200 leaders and their direct reports to consider whether they accept their 2008 variable cash pay,” Hommen’s message to staff said.

“This is strictly voluntary, targeting the senior levels of the organization,” Hommen said.

ING spokesman Nanne Bos declined to comment on how much in variable cash compensation the 200 management council members and their 1,000 team members received last year.

Dutch Finance Minister Wouter Bos will investigate whether he can block 2009 bonuses at financial companies receiving government aid, he said in a letter sent to parliament today.

ING, created in the 1991 merger of Nationale-Nederlanden and NMB Postbank Group, is cutting 7,000 jobs to reduce operating costs by 1 billion euros this year and is reviewing which divisions it may sell in the coming months. The company posted a fourth-quarter loss of 3.71 billion euros last month.