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Securities firms trim down
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October 1, 1998: 4:54 p.m. ET
ING to cut 1,200 jobs, net seen lower; Merrill Lynch institutes hiring freeze
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NEW YORK (CNNfn) - Dutch financial powerhouse ING Groep N.V. plans to cut about 1,200 jobs from its payroll and has reduced its forecast for 1998 blaming the global financial crisis affecting Asia and elsewhere.
Yet even though many on Wall Street acknowledged that emerging markets were problematic, some analysts and industry officials argued the moves were symptomatic of the recent dearth of activities in capital-markets departments and mergers and acquisitions at virtually every investment bank.
Indeed Merrill Lynch & Co., the nation's largest brokerage firm, has ordered employees to "minimize" travel and entertainment expenses, a company spokeswoman said. Also, some departments have implemented a hiring freeze in an attempt to trim down its work force through attrition, according to a recent memorandum.
The drastic measures follow one of the worst months in recent memory for new issues on Wall Street as only a handful of initial public offerings were priced in September.
Additionally, mergers and acquisitions have also slowed down considerably compared with the hectic pace of the first half. In the third quarter, the value of total announced deals fell to $300 billion from the $697.9 billion of the second quarter, according to industry research firm, Securities Data Co.
Reflecting the dismal conditions, shares of brokerage firms again felt the heat. Merrill's stock (MER) closed 4-9/16 lower to 42-5/8; PaineWebber (PWJ) lost 2-3/4 to 27-1/4; and Travelers (TRV) dropped 2-5/16 at 35-3/16.
A spokeswoman for ING Groep -- the parent company of ING Barings of London, which has been merged with Furman Selz in New York -- declined to specify which departments or geographic regions will be hardest hit by the staffing reductions. The estimate represents about 13 percent of the total work force of 9,000 employees.
In a statement, the Amsterdam-based company said it now expects to show an increase in full-year profits of merely 15 percent -- down from its previous forecasts of 30 to 35 percent.
In 1997, ING Groep recorded profits of 5.25 guilders (US$2.55) a share.
The financial conglomerate added that its insurance and asset management businesses were "developing favorably."
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ING Groep
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