Wednesday, December 14, 2016

Italy's banking crisis: Unicredit AXES 14,000 jobs and begs investors for cash to survive

ITALIAN banking giant UniCredit is to slash 14,000 jobs, as part of desperate plans to raise billions of euros and avoid a collapse that could destroy the eurozone.

The lender is launching Italy's biggest ever share issue in the hope of adding €13billion (£11bn) euros to its balance sheet, as the country's banking crisis reaches boiling point. 

Unicredit has lost more than half of its market value this year amid fears of bad loans and profitability worries. 

It's the fourth time the bank has begged investors for more cash since the financial crisis. 

Now the lender is set lose more than 10 per cent of staff by 2019 and embark on an ambitious cash call at the start of 2017.
The money will go towards shifting around €17.7bn (£15bn) of so-called noon-performing loans from the balance sheet of Italy's third largest bank.
It comes as troubled competitor Monte dei Pasche di Siena teeters on the brink of total meltdown after failing to raise investor cash through a similar rescue plan. 

But Unicredit's systematic importance mean the consequences of a failure would be a huge threat to the European banking system. 

Talking about the plans to shore up the bank, chief Executive Jean Pierre Mustie said: "We are taking decisive actions."

Italy has been thrown into political turmoil after the resignation of Prime Minister Matteo Renzi.
Now investors are far more wary of risking money in the country's crisis-hit economy and banks.
However, Unicredit has tried to reassure investors that its radical plan and jobs cuts mean it will be able to make dividend payments by 2019.

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