ING is investing EUR890 million in overhauling its domestic retail banking operations, which is expected to deliver an additional EUR440 million in annual pre-tax earnings by 2011. The bank says the new combination aims to achieve a cost income ratio below 50% in 2011.

Under the plan the Dutch bank will combine its Postbank and ING Bank retail networks under the ING brand. The bank will ditch its Postbank brand altogether in 2009.

ING says the direct business model of Postbank will form the basis of the combined bank, which will have more than eight million retail customers in the Netherlands. The bank is also investing in its current ING Bank network and says it will transform existing branches into "modern bank shops" where all customers can get personal advice.

Commenting on the 2500 job cuts, Eli Leenaars, member of the executive board, ING Group, says: "In line with our strong social policy, ING will make every effort to help affected employees from 'job to job' and to limit the number of compulsory redundancies to a minimum."

As well as overhauling its domestic retail operations, ING says it is looking to extend its direct banking operations, ING Direct, into large and mature markets.

In line with this ING has applied for a banking licence from Japan's Financial Services Agency (FSA) and plans to launch direct banking services in the country in the second half of the year.

"By entering Japan, ING Direct will expand its presence to countries representing approximately 70% of the global savings market," says Dick Harryvan, CEO of ING Direct.

Japan will be the 10th country in which ING operates its Web banking services. The direct bank currently has 18.2m customers and contributes six per cent of ING's overall profit. ING Direct added 707,000 new customers and EUR5.8 billion in own-originated mortgages in the first quarter.