Amsterdam  - Shares in Dutch bank and insurance giant ING Group shot up over 27.7 per cent on Monday as investors reacted positively to the bank's announcement of plans to slash 7,000 jobs in order to cut costs by 1 billion euros (1.287 billion dollars).

Investors were also pleased with new Dutch government support for ING Group.

A so-called Illiquid Assets Back-up Facility would cover the risks of the ING's Alt-A division, which deals with mortgages in the US subprime market. Due to the financial crisis, the mortgages can no longer be traded.

This has forced ING to devalue the Alt-A division from 39 billion dollars to 35.1 billion dollars at the expense of its own private equity, Dutch central bank DNB said in a statement Monday.

ING remains the owner of the Alt-A division. But ING and the state will now share profits and losses in ratio of, respectively 80 to 20.

The state, therefore, effectively serves as ING's guarantor of its US subprime mortgages.

"This problem is off ING's list of concerns," said Rob Koenders, a stock trader of Harmony Vermogensbeheer. "The company can now focus on its operational state of affairs."

In signing the agreement with the Dutch government, ING also obligated itself to provide an extra 25 billion euros in loans to companies and private individuals.

In addition, ING Group's board of directors will cancel all bonuses for 2009.

Publishing its year results earlier on Monday, ING Group said it was expecting a loss of 400 million euros for 2008.

The group's banking division retained a net profit of 500 million euros but its insurance division is expected to post a 900 million- euro loss, according to the statement.

In a separate statement, ING announced that Monday that CEO Michel Tilmant had stepped down "in light of the extraordinary developments over the past few months and given his personal condition."

ING board member Eric Boyer is to serve as acting CEO until the next annual shareholders meeting scheduled for April 27, ING said.

Tilmant would retain an advisory position until his retirement on August 1.

ING said it hoped to receive shareholders' approval at the April meeting for the appointment of Jan Hommen, previously chairman of ING's supervisory board, as its new CEO.

On October 19, ING Group became the second Dutch bank, after Fortis, which also comprises ABN Amro, to receive government support.

The central bank at the time emphasized ING was a "strong and healthy bank".

ING shares have however dropped substantially, from almost 22 euros a share in September to 5.276 euros a share on Friday. A 10- billion euro injection from the government in October did not help boost prices.

The International Netherlands Group (ING) was created in a 1992 merger of several Dutch banks and insurance companies. It is active in banking, insurance and asset management, with more than 75 million customers worldwide.

In late 2007, the group had some 338 billion euros in saving deposits, making it the second largest retail bank worldwide, after the Japanese Mitsubishi UFJ Financial Group. (dpa)