UniCredit confirms 6,000 job cuts
Italian bank continues its 5-year long series of job cuts and branch closures
In an effort to reverse the turmoil of recent years Italy’s largest bank, UniCredit, has confirmed plans to cut 6,000 jobs and close at least 450 branches in the country by the end of 2023.
In a letter to Italy’s unions the bank’s Chief Executive Officer Jean Pierre Mustier commenced the first stage of his efficiency plan, which aims to reduce UniCredit’s workforce by 8,000 people, or 9 per cent. In the past five and a half years UniCredit has already cut around 20,000 jobs in an effort to maintain efficiency and profitability.
Italy is already in a recession not helped by years of corruption, inefficient labour market rules, weak productivity and the negative interest rates imposed by the European Central Bank (ECB).
At around 130 per cent the country’s debt to GDP ratio is currently at a level not seen since the Second World War. Italy’s banking sector has often been pointed to in recent years as a potential trigger to the euro zone’s next financial crisis. The banks hold a high ratio of the government debt, should investors lose faith in either the government or the banks then Italy could face a national default.
With the French government and banks also owning a fair share of Italian debt such a default threatens to drag down the rest of the euro zone. While other European banks such as Deutsche Bank and Danske Bank have also announced job cuts citing a desire for efficiency in an increasingly digital marketplace, the severity of UniCredit’s cuts reflect the problems facing the Italian banking sector in general.
Commenting on Mustier’s job cut confirmation a spokesperson for UniCredit stated: “the executive focuses on further simplifying the bank’s structure and improving the way it allocates capital.”
Reacting to the news Fulvio Furlan, General Secretary of Uilca, one Italy’s largest banking unions, said: “Unions are strongly against the job and branch cuts plan. Discussions with unions must lead to solutions that limit the job cuts and include a plan of new hirings."
While some more digitally-versed people may be hired to the streamlined UniCredit, the bank seems more focussed on ensuring higher returns for its shareholders. As part of Mustier’s 2023 vision the bank will increase investor returns through a policy of share buybacks and dividends.
By mid-afternoon trading the bank’s share price gained 1.32 per cent to stand at €14.14.
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