Italian bank UniCredit to make thousands of job cuts as third quarter profits slide 30 per cent

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

UniCredit, Italy’s largest bank by assets, said in a statement Wednesday that net profit for the three months ending Sept. 30 was 507 million euros ($544 million), down from 722 million euros in the same period last year.

It said the drop in earnings was due to 400 million euros of non-recurring charges, including an impairment charge for its Ukrainian subsidiary Ukrotsbank, which UniCredit is negotiating to sell, and loss provisions for Swiss franc-denominated loans in Croatia.

Trading profit dropped 36 per cent to 248 million euros.

The bank separately announced its revised strategic plan, saying it would cut jobs in Germany, Austria and Italy as it aims for a net profit of 5.3 billion euros by 2018. Some 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. The sale of the Pioneer stake is expected to be completed next year.

Some 6,900 jobs will be lost in Italy in the cost-cutting manoeuvr, which is expected to save 1.6 billion euros.

“We need to adapt ourselves to a new environment,” CEO Federico Ghizzoni told a conference call. He cited as positives the economic recovery in Italy, but said low interest rates remain a challenge. Ghizzoni said the bank was assuming a 0 per cent benchmark interest rate until 2018.

Shares were up 1.2 per cent to 5.99 euros in Milan trading.