* CEO sees no improvement in bad loan provisions
* Shares up 2.9 pct in line with other bank stocks (Adds CEO comment, background)
AMSTERDAM Jan 7 (Reuters) - Dutch banking and insurance group ING said it may need to cut more costs to cope with new regulations and high provisions for bad loans, highlighting the pressures on banks to shrink their businesses.
Banks globally are facing higher capital requirements to satisfy regulators at a time when a weak economy is reducing demand for investment banking and credit services, forcing them to reduce costs by cutting operations and jobs.
Deutsche Bank in September announced a plan to cut bonuses, axe more jobs and sell assets to meet tougher capital rules, while Swiss bank UBS is cutting 10,000 jobs as it winds down its fixed-income division.
Nomura Holdings Inc, Japan's biggest brokerage, will make cuts in its equities and investment banking businesses, with its loss-making European operations taking the biggest hit.
ING, which is dismantling its banking and insurance model after needing 10 billion euros ($13 billion) of state aid in 2008, said on Monday the weak economy would continue to have an impact on operations.
"Risk costs for the bank have been increasing amid the economic downturn, and we don't foresee an immediate improvement," Chief Executive Jan Hommen said in a New Year's speech to his employees.
Risk costs are provisions for loans that are not expected to be repaid or not repaid fully because borrowers are in financial trouble or are going bankrupt.
"While we have initiated steps to reduce expenses, we are also confronted with headwinds including higher regulatory costs and the Dutch bank tax, and we must continue to align our cost structure to a leaner operating environment," Hommen said.
In November, ING announced a second round of job cuts, axing 2,350 mostly European jobs. That followed a plan in 2011 to cut 2,700 Dutch jobs to cope with deteriorating markets.
ING employed 86,881 people at the end of September.
ING shares were up 2.9 percent at 7.60 euros by 1010 GMT, in line with increases in the share prices of other European banks after regulators eased global bank liquidity rules to enable lenders to issue more credit to help struggling economies grow. [ID:nL5E9C61TH ($1 = 0.7666 euros) (Reporting by Gilbert Kreijger; Editing by Erica Billingham)