UniCredit to cut 18200 jobs, boost capital

The bank anticipates exiting or restructuring its Austrian retail activities and Italian leasing business by the end of 2016.

Italian bank UniCredit announced Wednesday it will shed 18,200 jobs by 2018 as its third-quarter profits slid 30 percent mainly due to charges on businesses in Croatia and Ukraine.

Job cuts at Unicredit will take place in Austria, Italy and Germany, said the bank, which is based in Milan.

A few 6,000 of the job reductions will be achieved by the sale of Ukrotsbank and the planned tie-up of its Pioneer Investments unit with Santander Asset Management.

Shares were up 1.2 percent to 5.99 euros in Milan trading.

Italy’s biggest bank by assets returned to profit previous year after hemorrhaging 14 billion euros in 2013 as it wrote down assets ahead of “stress tests” carried out by the European Central Bank on the heels of the eurozone financial crisis.

“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. Ghizzoni said the bank was assuming a 0 percent benchmark interest rate until 2018.

CEO Federico Ghizzoni said his plan was realistic and entirely self-financed: “We are fully confident of its successful execution”.

The plan is strong and aggressive with a massive amount of cost cutting said an industry analyst in Switzerland.

Historically, the bank’s broad worldwide exposure helped to offset weakness in Italy’s economy. Analysts expected a net profit of EUR372 million, according to a poll by data provider FactSet.

Net profit for 2018 is expected at €5.3 billion, down from €6.6 billion envisaged in the previous plan.

UniCredit is just the latest major European bank to radically revise its operations as low interest rates increase pressure.