UniCredit to shed 18,200 jobs and boost capital

Wed Nov 11, 2015 11:24am EST
 
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By Silvia Aloisi

MILAN (Reuters) - UniCredit (CRDI.MI: Quote) is slashing its workforce by 14 percent and looking to restructure or sell businesses in Austria and Italy as it seeks to bolster its finances without asking shareholders for cash.

UniCredit, the latest major European bank to announce an overhaul to boost profits and increase capital, unveiled a new business plan on Wednesday that forecast a CET 1 capital ratio - a key measure of financial strength - of 12.6 percent in 2018.

The ratio would drop to 11.5 percent after dividend payments but is above a target of 10 percent in a plan last year that had to be scrapped because it was based on an over optimistic economic outlook and a more lenient regulatory framework.

The bank, Italy's biggest measured by assets, said net profit for 2018 was now expected to be 5.3 billion euros ($5.7 billion), down from 6.6 billion envisaged previously.

Job cuts will total 18,200, mainly in Italy, Germany, Austria and central and eastern Europe.

The overall figure is higher than expected but includes 6,000 jobs that will go with the previously announced sale of its Ukrainian business and joint-venture for the bank's Pioneer asset management with Santander (SAN.MC: Quote).

Unicredit is targeting cost cuts of 1.6 billion euros and said that by end-2016 will either exit or revamp poor performers, such as its retail business in Austria and leasing operations in Italy. Cost cutting will be partly offset by a 1.2 billion euro investment in digital technology.

"It's a rigorous, serious and ambitious plan which I think they can pull off without the need for a cash call," Ifigest fund manager Roberto Lottici said. "If the market was 50-50 on a capital increase before I reckon now it's something like 20-80."   Continued...

 
UniCredit Bank headquarters is pictured in Milan March 11, 2014. REUTERS/Alessandro Garofalo