Business

Saturday September 19, 2009

Up close and personal with Jan Hommen

By THEAN LEE CHENG


AT 66, Jan Hommen may well be the most scrutinised man in the Netherlands – by the government, the private sector and the population at large. It is not a situation he relishes but he is assuming the responsibility thrust on him with a firm quiet dignity.

The position of CEO at ING, the Netherlands largest banking and insurance group, has today been described as one of the toughest in the small European nation of about 16 million.

At a time when trust in banks and the financial sector has hit rock bottom and the horizon continues to remain fuzzy, Hommen, who has never led a bank before, has been entrusted to keep one of the world’s largest banking and insurance group afloat.

His recipe is simple – back to basics and the customer comes first. “I believe in treating customers well, and not just doing the transaction right.”

He used the same formula in electronics giant Philips when he was chief financial officer (CFO).

“There will be essentially three phases: get the financials corrected and strengthened, focus on fewer coherent businesses and reinforce franchises in markets we focus on,” he says.

The group will withdraw from 10 of the 45 countries where it does business. ING will, at the end of the day, be a European bank with small foot prints in other parts of the world and insurance will remain a global business.

Hommen admits that until today, he has not been 100% specific. “We do have a couple of things to sell,” he says, but wants to avoid a fire sale during a whirlwind trip to Asia which started in Amsterdam on a Sunday and ended on a Tuesday. Four countries – South Korea, India, Singapore and Malaysia – in three days.

“I have got used to sleeping on the plane. These are trying times in the world’s financial sector and I wanted to make sure, see for myself, the territory ING is in and talk to the people here,” he says.

He did that when he joined the ING group supervisory board in June 2005, after his retirement from Philips that same year as CFO. He walked into everybody’s office and asked many questions.

The Netherlands has a two-tier governance structure with supervisory board (SB) members having responsibilities similar to non-executives; nomination of executive board members, their remuneration (subject to AGM approval), and business strategies.

Hommen does not like being in the limelight. Even when he was in the corporate world, he was not known to make a habit of combining working life with honorary functions at cocktail parties nor concert halls. Nobody knows what sort of music he likes.

A quiet and unassuming man, he prefers to do his bit – which usually ends up as big chunks – unobtrusively. But he enjoys work. Most of the jobs he landed needed his expertise to settle some problems.

“What inspires me is teamwork. Teamwork brings out the best in everyone. Any company that can pool its knowledge and expertise is a stronger company compared to those that cannot do it. I am also passionate about providing opportunities, especially for the younger people. I feel that too often we hold them back for too long.”

His present position is the most challenging so far. While he has held important positions – chairman of supervisory boards at publishers Reed Elsevier, and TNT, one of the world’s biggest postal and logistics firm and and University Maastricht Medical Centre – he had never been at the helm of such a big group before.

“Now I have one job – a lot easier than being on the board of four to five companies – and I’ll be able to focus on banking and insurance. I understand the banking business quite well from my experience in the corporate world,” he says.

Hommen took over from then-CEO Michel Tilmant when that seat became very hot after the financial world collapsed. He was confirmed as CEO in April this year.

Twice in three months, the Dutch giant, had to turn to the government for capital injection to the tune of 10 billion euros as a result of the financial meltdown in September. The company has reduced headcount by 8,219 full-time equivalents from its global pool of 125,000 employees and will sell some of its assets to generate between 6 and 8 billion euros, but will avoid a fire sale.

“It is not be a pleasant thing to do, but it has to be done. We had too many people,” he says.

The group returned to profit in the second quarter with a net profit of 71 million euros, down from 1.9 billion euros a year ago, and an improvement on a 793 million euro net loss in the preceding three months. Cumulative losses over nine months amounted to 5 billion euros.

The job as CEO and chairman came unexpectedly. “I was waiting for my wife who had gone to pick up some clocks which we had sent for repair. It was before Christmas last year. The phone rang. When I was asked to assume the position, I said No!”

After the New Year, the financial turmoil grew worse. At the same time, the personal toil was getting too great for the-then-CEO Michel Tilmant, 56.

“I felt there were other people who can do the job,” he says quietly. There wasn’t.

Head-hunted

When electronics giant Philips was looking for a chief financial officer 13 years ago, Hommen was virtually an unknown in his native country. The position called for a Dutchman. He was in Pittsburg in aluminium company Alcoa Inc where he has been since 1975 until 1997. From 1978, he worked at Alcoa’s head office, becoming CFO in 1991. He had remained in the United States for about 20 years before his return to Holland in the late 1990s as CFO in Philips until his retirement in 2005. He joined ING Group supervisory board on June 1, 2005.

“Although I understood the job well, I wanted to make sure that we did whatever we could to give him (Tiltman) the chance to prove that he was still capabale of doing it,” he says.

Like American banking and insurance giants Citigroup and AIG, ING is colossal, expanding into regions and going on to new business models as a result of the dotcom boom. Ironically, it was the group’s expansion into online and telephone retail banking in foreign markets through its ING Direct brand that became an unexpected source of weakness when the credit crisis hit.

“I have been very lucky to have opportunities given to me in my working life. I have had jobs that required five to six years experience when I had none. Now I’d like to give others that same opportunity.

“There will be business reviews every month and we will be on the road more often to get an impression of the talent pool. That way, we can see how people work, what makes them tick. This will be more personal touch. A lot of people have great ideas and will get a chance to present their ideas. We want to channel all that in the right direction,” he says.

Thus far, there has been much confidence in his leadership. That does not mean there has been no setback. He admits there have been mistakes made which hopefully others can learn from, one of which being making investment decisions only after doing a full due diligence test.

As he look back on other decisions he has made, his mind goes back to the United States. “We went to the US with the children. When we came back about 20 years later, we left the children behind because they wanted to remain in the US. Was it right? I don’t want to look back. It was a decision we made and have to live by that. One thing is for sure, we will be going to the US more often to see the children and grandchildren.”

  • E-mail this story
  • Print this story