UniCredit confirms 6,000 Italy job cuts as union talks begin

February 10, 2020

By Gianluca Semeraro

MILAN (Reuters) – UniCredit confirmed plans to cut 6,000 jobs in Italy over the next four years as the country’s biggest bank began the negotiation process with unions on Monday over layoffs and branch closures.

In December UniCredit <CRDI.MI> unveiled a new plan to 2023, under which it would cut 8,000 jobs and close 500 branches, angering Italian unions, which said then that they expected 5,500 layoffs in Italy and up to 450 branch closures.

In a letter to unions, a copy of which was seen by Reuters, the bank said that there would be 5,500 cuts in Italy under the new plan, plus a further 500 that it has yet to deliver under its previous plan to 2019.

The Milan-based lender, which also confirmed the 450 planned branch closures in the letter, declined to comment.

“UniCredit continues to have an unacceptable attitude,” Lando Maria Sileoni, head of Italy’s biggest banking union FABI, said in statement that also called for fresh recruitment to offset some of the layoffs.

The UniCredit letter said that the bank wanted to find “shared solutions” and pointed to early retirement for staff close to pension age – the solution favored by Italian banks.

The government has also been following the situation and Labour Minister Nunzia Catalfo on Monday said that UniCredit’s top managers have been summoned for talks on Feb. 21.

UniCredit has undergone a major restructuring under French Chief Executive Jean Pierre Mustier, who was hired 2016 to turn it around and tackle concerns about its weak capital base.

To strengthen the balance sheet, Mustier has cut costs, dumped bad debts and shed assets. He also raised 13 billion euros ($14 billion) by selling new shares to investors.

Mustier’s first business plan, dubbed Transform 2019, envisaged a total of 14,000 job cuts.

In a sign his strategy is on track, UniCredit in December said it would improve shareholder returns through dividends and a share buyback.

Last week the bank said it was considering lifting the capital distribution further after meeting its profit goal.

UniCredit’s letter also said that revenue trends would never return to levels reached before the global financial crisis, pointing to the challenge posed by negative interest rates and competition from non-banking players.

UniCredit said it had to bring down costs to be able to provide services at a competitive price to customers who were increasingly switching to digital channels.

It said it had recorded more than 300 million transactions on non-traditional channels in the past 12 months, while those carried out in a branch were down 55% on 2016 levels.

(Reporting by Gianluca Semeraro; Writing by Valentina Za; Editing by Alexander Smith and David Goodman)