UniCredit slashes jobs, eyes 13-bln euros in fresh capital
MILAN - Agence France-Presse
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Italy’s biggest bank, UniCredit, announced plans on Dec. 13 to slash 14,000 jobs and raise billions of euros in fresh capital as the country gets to grips with political instability and a banking crisis.The bank, one of the worst performers in European bank stress tests, confirmed it would need to seek 13 billion euros ($13.8 billion) in fresh capital from investors despite political complications in Italy and the nation’s third-largest bank scrambling to avoid a government-led rescue.
UniCredit also said it would shed around 14,000 jobs by the end of 2019 as part of a cost-saving drive.
The bank estimated this would save it 1.1 billion euros in staff costs. It said it planned to slash other costs by 600 million euros, resulting in an annual saving of 1.7 billion euros.
UniCredit’s announcements came at a time when investor confidence in Italy could be on the mend after the formation of a new cabinet under Paolo Gentiloni, having been shaken by the collapse of former Prime Minister Matteo Renzi’s government.
Analysts welcomed the package of measures, with Paola Sabbione at Deutsche Bank calling it “a good trade-off between profitability and capital strengthening.”
Analysts at Jefferies said the upfront bill of 13 billion euros “is clearly large”, but that the “aggressive balance sheet clean-up paves the way for a more substantial re-rating.”
ING analysts warned that the clean-up will result in a write-down which would push results for the year’s final three months deeply into the red.
“Having said that, the improvement of the bank’s risk profile and capital position would be credit-positive.”
In response, UniCredit’s shares surged by more than seven percent in early Milan trading, helping lift other Italian banking stocks.
UniCredit’s announcement was part of a major strategic review launched under new chairman Jean-Pierre Mustier that has so far involved selling off assets to strengthen the bank’s capital base.