Holland’s ING Group announced that it will reorganize its insurance activities in Argentina, effectively leaving the market with the resulting loss of 650 jobs.
A company announcement said it had made the decision “after careful deliberation and assessment of the strength of its business.” While concentrating on its existing clients ING said its Argentine Insurance branch would immediately start “closing its branch offices throughout the country and will be terminating the 650 staff at these locations, as well as part of the Buenos Aires head office. ING will retain adequate staffing to continue the service to its customers.”
ING also noted: “Today’s announcement is confined to the ING Insurance business in Argentina. ING’s in-country banking operation is not included in the decision.” The move follows a review of the company’s Latin American strategy, and affirms its intention to move away from less profitable sectors in order to more fully concentrate on its core business activities.
In Argentina the review determined that the insurance subsidiary was “not generating sufficient return on investment to satisfy the needs of ING’s constituents.” The company indicated it “aims at further improving its overall business by focusing on core activities, clients and countries. Maximizing the company’s performance is a pre-requisite for continued growth.”
The company also said it “notified the local regulator of its intent and received their support on the decision. Consequently, ING will provide market-competitive severance and outplacement support for its employees in Argentina. ING Insurance will continue to serve its existing customers through a centralized back-office capability that will be run from its headquarters in Buenos Aires.”
A report from Reuters speculated that ING might be contemplating further disposals of less profitable Latin American businesses. The company’s situation in Mexico has caused particular concern. While it is one of the country’s largest banking and insurance companies, it has been embroiled in a nasty dispute with a Mexican mining company over $300 million in insurance proceeds. Last August a local judge ordered the arrest of 10 ING employees involved in the dispute, and further arrest warrants were issued last month.
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