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Stop. Hamers' time at ING comes to an end; new CEO set to keep digital focus

Incoming ING Groep NV CEO Steven van Rijswijk is expected to prioritize the Dutch bank's digital push as Ralph Hamers steps aside ahead of his move to UBS Group AG later this year.

Under Hamers, ING has shifted its focus to digital, with mobile interactions accounting for approximately 82% of the bank's 4.5 billion interactions in 2019, compared with 52% of the roughly 2.5 billion interactions in 2016.

Van Rijswijk has hinted that his strategy might not be too far removed from his predecessor's given that he was part of the executive board that hatched ING's game plan.

"The world is changing rapidly, with evolving technology, emerging players, new regulations and changing customer needs, increasingly requiring more digitally delivered services, with mobility […] I may put different accents here and there," van Rijswijk said in an interview posted on the bank's website.

Other items in van Rijswijk's inbox when he formally takes over as CEO July 1 include continuing to strengthen the bank's compliance systems and navigating the coronavirus pandemic, which have created economic conditions that could drag on ING given the scale of its retail banking business, according to ratings analysts.

Impact of the pandemic

Over the last four months, the bank's shares have lost more than a third of their value. Although the decline can be attributed in large part to the impact of the coronavirus pandemic, it has underperformed the STOXX Europe 600 Bank index and UBS, Hamers' new employers from November.

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The coronavirus crisis has clouded the past four months for many European banks, including ING, which posted a 40.1% year-over-year decline in its first-quarter results. The bank also suspended dividend payouts and share buybacks in line with regulatory recommendations.

The ECB, aside from recommending the suspension of bank capital distributions, slashed rates, exacerbating a lower-for-longer interest rate environment, leading to concerns about the economic effects that the pandemic could have on the bank's earnings.

"We believe weaker business volumes in retail and corporate banking and above historical average [loan impairment charges] will exacerbate the pressure on earnings," Fitch Ratings said. S&P Global Ratings also said ING's 2020 performance will suffer from lower revenues for which "its cost-efficient digital banking model will not be able to compensate."

Unlike most European banks, UBS posted a year-over-year profit increase in the first quarter but warned of the pandemic's impact. It also distributed dividends in respect of 2019 but in two payouts.

Looking ahead

ING is still working to bolster its compliance and know-your-customer systems. "Combating it [financial crime] starts with us: we have to do the right thing and I will continue to focus on this area, also in my new role," van Rijswijk said.

An ING veteran of about 25 years, van Rijswijk has been the group's chief risk officer for the last three. ING paid €775 million to settle a Dutch money-laundering investigation in September 2018.

Hamers' entry at UBS means it will say goodbye to long-time boss Sergio Ermotti, who is set to become chairman of Swiss Re AG.

Hamers, who has had the top job at ING since 2013, is joining a group with a completely different business model as UBS' core businesses are wealth management, asset management and investment banking.

The STOXX Europe 600 bank index has also excluded UBS, classifying it instead as an asset manager and transferring it to the financial services index.