Big Bank To Cut 18,200 Jobs As Fresh Capital Dries Up

ROME— UniCredit SpA said on Wednesday that it would cut as many as 18,200 jobs as part of a revised strategic plan aimed at avoiding raising fresh capital.
Italy’s biggest bank by assets has been under pressure for some time to take more radical action to improve its capital situation. Last year, a European-level health check of lenders revealed weakness in its capital position, although UniCredit passed the tests.
On Wednesday, the Italian lender reported a 30% fall in its third-quarter net profit, which stood at EUR507 million ($545 million), due to lower trading income and higher provisions for bad loans. Analysts expected a net profit of EUR372 million, according to a poll by data provider FactSet.
UniCredit said that, under its revised plan, it is targeting a net profit of EUR5.3 billion in 2018 and a Common Equity Tier 1 capital ratio of 12.6%.
It also specified that the planned job cuts would come from the sale of its Ukrainian unit and the planned tie-up of its asset manager Pioneer and Santander Asset Management.
Last year, the bank performed a major cleanup of its balance sheet and posted a loss of EUR15 billion for the last quarter of 2014–the biggest loss in its history. At the time it also announced a new strategic plan.
Earlier this year, though, Chief Executive Officer Federico Ghizzoni said that the bank had undertaken a review of that plan after protracted low interest rates cut into the revenue the bank makes on lending.
In its revised plan announced on Wednesday, the bank said it targets “significant” cost-containment measures of EUR1.6 billion by 2018. It also plans to exit or restructure all its poorly performing assets by the end of 2016.
UniCredit shares added on gains after the revised plan was unveiled, and by 1415 GMT they traded up 1.8% at EUR6.03, outperforming an overall positive market.