Faced with a financial crisis at home and a collapsing share price, Italy’s biggest bank has responded in a big way.
Under new management, Unicredit on Tuesday announced an aggressive set of measures to strengthen the bank’s capital position and boost its earnings by slashing thousands of jobs.
Unicredit will raise €13 billion, or $13.8 billion, by selling new shares to bolster its equity cushion against financial shocks, set aside €8.1 billion to cover bad loans and sell a €17.7-billion portfolio of problematic debt.
The bank plans to cut 14,000 jobs by 2019, making it the latest of Europe’s many once-dominant banks to announce a major downsizing this year.
The bank employed 101,000 people at the end of 2015, meaning 14 percent of positions will disappear in three years – double the number that had been announced a year ago.
That also means more job losses in Germany, Europe’s largest economy, where Unicredit owns Munich-based commercial and retail bank Hypo Vereinsbank. The Italian bank cut 2,372 of 16,310 posts at Hypo Vereinsbank at the end of last year.
Investors cheered the announcement, which is the brainchild of Unicredit’s new chief executive, Jean-Pierre Mustier, a former paratrooper who is clearly not ashamed of drawing that parallel. In fact, the bank’s new restructuring is all about military precision, he said.