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Austria's Hypo to cut a quarter of jobs in Italy
September 13, 2012 / 11:22 AM / in 5 years

Austria's Hypo to cut a quarter of jobs in Italy

VIENNA, Sept 13 (Reuters) - Nationalised Austrian lender Hypo Alpe Adria is to cut almost one in four jobs at its Italian operation as it tries to shrink itself back to health ahead of a planned reprivatisation, a spokesman said on Thursday.

The bank, which was taken over by the Austrian government in 2009 to avoid a collapse that would have sent shockwaves through the region, plans to cut 118 out of about 500 jobs in Italy without closing any branches.

It is trying to sell the Italian business, where leasing, deposit and loan volumes have fallen by about a third since the financial crisis of 2008.

“The measures are necessary for the Italian bank, which has always been profitable, to remain profitable,” the spokesman said, emphasising that the cuts would have been necessary even without the sale process, which is being run by Citigroup.

Hypo said it was now entering into consultations with trade union representatives in Italy, which could take up to 50 days before any dismissals would take place.

The bank also recently restarted the sale of its Austrian unit, where expressions of interest are due by Sept. 21 in a process run by JPMorgan.

Hypo, founded in 1896, began expanding beyond its Austrian roots in 1988, first into Italy, then the former Yugoslavia, and is now active in 12 countries. Austria today accounts for only 378 of its roughly 8,000 employees.

After it sells the Austrian unit, Hypo will keep the headquarters of the holding company while it winds down the rest of the bank.

The bank is also selling its southeastern European unit in a process run by Deutsche Bank. It aims to complete all three sales by 2016 at the latest.

Hypo Alpe Adria has been told by the Austrian financial markets regulator that it must raise a capital buffer of 2.19 billion euros ($2.82 billion) by March 31, 2013, more than the 1.5 billion euros it was initially told to raise by the end of 2012.

Both the bank and the Austrian government are trying to avoid pouring more taxpayers’ money into Hypo, which has until Sept. 28 to respond to the regulator.

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