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Italy's UniCredit to cut jobs and raise billions

Tuesday, December 13, 2016 - 01:46

Italy's largest bank, UniCredit, has unveiled plans to raise 13 billion euros ($13.8 billion) in the nation's biggest share issue. As Sonia Legg reports, the lender is trying to shore up its balance sheet and distance itself from Italy's broader banking crisis.

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BROADCAST AND DIGITAL RESTRICTIONS~** Broadcasters: NONE Digital: NONE *~ Some say it's high time Italy's largest lender put its house in order. And UniCredit is now trying to shore up its balance sheet with what's been called a "bold" and "pragmatic" plan. (SOUNDBITE) (English) TOM STEVENSON, INVESTMENT DIRECTOR, FIDELITY INTERNATIONAL, SAYING: "It has two main problems, a huge number of non-performing loans, something like 18 billion euros of non-performing loans. It also has a bloated workforce, over 100,00 employees and they are planning to cut that by about 14,000 and raise about 13 billion euros in a cash call which will largely be used to write off those bad debts." It's a difficult time for Italian banks and the economy. Monte dei Paschi is at risk of failure and a new government has just been installed in Rome, with elections expected early next year. Ensuring financial stability is one of the new leader's main priorities. (SOUNDBITE) (Italian) PRIME MINISTER PAOLO GENTILONI SAYING: "I want to say very clearly that the government is ready to intervene in order to guarantee the stability of banks and the savings of our citizens." UniCredit is the only Italian bank considered important to the stability of the global financial system. It's lost more than half its market value this year, thanks to worries about profitability, bad loans and a weaker balance sheet than major European rivals. The share issue will take place in the first quarter of 2017 in the hope of boosting profits and paying out dividends by 2019. By then the bank's core capital ratio should be above 12.5 percent. It'll also have a third less staff than it did at the end of 2015 as this cull isn't the first. The CEO also insists Monte dei Paschi's troubles won't upset the plan, even though it's also trying to raise cash.

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Italy's UniCredit to cut jobs and raise billions

Tuesday, December 13, 2016 - 01:46