ING seeks to calm money-laundering uproar with CFO's departure

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ING Group sacrificed one of Chief Executive Officer Ralph Hamers' top deputies as the Dutch lender seeks to restore public trust in the wake of a money-laundering scandal.

Chief Financial Officer Koos Timmermans will step down when a successor is found, the bank said. While ING said it fully backs the CEO, its supervisory board has already bowed to political pressure and reversed its earlier opposition to any board members resigning in connection with the investigation, which led to one of the biggest fines ever paid by a Dutch lender.

Hamers faced a barrage of criticism from politicians and shareholders this year even before the bank agreed last week to pay about $900 million to settle a Dutch investigation into corrupt practices by a former client. Banks in Europe are under ever more pressure to prevent money laundering, with Denmark's Danske Bank A/S facing criminal investigations after its Estonian operations were allegedly used to launder as much as $9 billion.

"It would have been very disruptive for ING to lose Hamers at this stage," said Jason Kalamboussis, an analyst at KBC. "The bank has a strong focus on digital, which is a big strength for ING, and Hamers is the one who is spearheading this." ING needs to find a CFO who can help execute the CEO's tech strategy, he said.

Timmermans, a 22-year ING veteran, once headed the bank's Netherlands unit, which was at the center of the probe. ING acknowledged "serious shortcomings" in executing customer due diligence policies to prevent financial crime at the unit from 2010 through 2016.

"Hamers still has the full support of the supervisory board," Chairman Hans Wijers told the ANP press agency. Though ING concluded last week that nobody from the executive board needed to leave, the "extreme reactions" from politicians and the public prompted ING to accept the resignation of the board member who was "most responsible," he said.

Timmermans' departure is "appropriate," Dutch finance minister Wopke Hoekstra, who earlier discussed the matter with Wijers, wrote in a letter to parliament. Other politicians also welcomed the move: ING's decision would have been more powerful if it had come a week earlier, but is a good signal, Roald van der Linde, a member of the ruling VVD party, said by email.

Timmermans, who hasn't been accused of any wrongdoing, declined further comment when reached on his mobile phone. He joined ING in 1996 and had been a member of the executive team since 2007, when he was appointed as the company's first chief risk officer on the executive board. In 2011 he became vice-chairman of the management board for banking. He was appointed chief financial officer in 2017.

The Dutch investigation focused on the bank's role in matters including unusual payments by the former VimpelCom Ltd. to a company owned by a Uzbek government official. ING was suspected of failing to report unusual transactions or not reporting them in time. VimpelCom, which has changed its name to Veon, pleaded guilty in 2016 to violating U.S. corruption laws.

According to the public prosecutor, the Amsterdam-based bank systematically failed to detect unusual payments as it under-invested in compliance.

"We deeply regret the shortcomings found and take this matter very seriously," Wijers said Tuesday.

Pay uproar

The fine and resignation come just months after ING had to backtrack on a pay boost for Hamers. The continuing bad news drove the stock to a two-year low on Friday. The shares, down about 28 percent this year, fell 0.8 percent at 3:25 p.m. local time Tuesday.

The tumult increased further last week after the Dutch daily Het Financieele Dagblad said that the bank had signaled to managers that information technology problems could threaten its business. On Monday, ING's home city of Amsterdam, whose finances the bank has handled since 1917, said it was putting that contract out to tender early, citing the money-laundering scandal and dissatisfaction with Hamers' proposed pay increase.

"Reading through the statement of Chairman Wijers, it seems that ING picked Timmermans as a scapegoat," said Paul Koster, chairman of VEB, an influential Dutch investor association.

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