ABN Amro Group NV plans to cut as many as 1,375 jobs through 2020 as the Dutch lender begins to implement a 200 million-euro ($225 million) cost-reduction program.
The move will affect positions in the finance, risk, human resources, catering and communication units and about 950 jobs will be eliminated by the end of next year, according to a memo sent to employees on Monday. The cuts through 2020 represent about 6 percent of the bank’s 21,939 employees as of the end of June.
“It makes sense,” Benoit Petrarque, an Amsterdam-based analyst at Kepler Cheuvreux, said by phone. He has a buy rating on the stock. “There’s probably a bit more cost-cutting to come on top to get to 200 million euros. Perhaps retail branches.”
Increasing competition, regulatory pressures and low interest rates are pressuring the bank’s profits, which climbed 10 percent to 662 million euros in the second quarter from a year earlier. The Amsterdam-based lender is seeking to lower its cost-income ratio to 56 percent from 60 percent by the end of 2017 through job cuts and a new technology system.
“Unfortunately, we cannot avoid reorganizing,” Chief Executive Officer Gerrit Zalm said in the memo. “We need to simplify our organization and cut back.”
ABN Amro is planning to increase the dividend payout ratio to 50 percent in 2017 from 40 percent this year. The bank’s shares fell as much as 2.4 percent on Monday and were trading 2.1 percent lower at 18.49 euros at 1:13 p.m. in Amsterdam.
The news was first reported by Dutch public broadcaster NOS.