Bailed-out bank plans to fire 4,600 people

MILAN - Agence France-Presse

The main entrance of the Monte dei Paschi bank headquarters in Siena is seen in this file photo. The lender has accepted a 1.5 billion euro state bailout. REUTERS photo

Italy’s Banca Monte dei Paschi di Siena, the world’s oldest bank, said yesterday it will cut its workforce by 4,600 people by 2015, as it accepted a state bailout loan.

BMPS said it will borrow roughly 1.5 billion euros ($1.87 billion) from the government in order to pay off debt and shore up its capital, and said in its strategic plan for 2012-2015 that it would reduce posts and sell assets. The Tuscan bank said it would carry out the “necessary procedures” to obtain a bailout loan “estimated at around 1.5 billion euros” by the end of the year.

BMPS said its new strategic plan would “entail significant capital strengthening, a strict policy to safeguard asset quality, a structural balance of liquidity and no dependence on the European Central Bank.” The government had offered the struggling bank up to two billion euros in aid in what it described on June 26 as “urgent measures to raise BMPS’s capital funds” as Italy struggles to stave off debt crisis contagion.

The aid was necessary because the bank had admitted it was “impossible” to find private investors to boost its funds owing to “currently highly volatile market conditions” as the eurozone crisis intensifies, the government said.

BMPS will issue bonds reserved for the state for a total of 3.4 billion euros to raise the 1.5 billion euros offered in this bailout, and pay off a government loan taken in 2009 as the financial crisis bit.

The bank has pledged to pay back three billion euros by 2015.

“Asset disposals, group rationalisation and back-office outsourcing actions, in conjunction with early retirement for pension-eligible employees, will lead to a significant reduction in headcount,” the bank said. It also said it plans to close 400 branches and launch a new online bank. The bank, which posted a 4.69 billion euro loss in 2011, has forecast a 630 million euros net profit in 2015. It said it will re-evaluate its assets and take an impairment charge at the end of June and release the results along with half-year accounts.