Unicredit, Italy’s biggest bank by capitalization, said on Thursday it planned to cut 9,000 jobs in western Europe and invest in central and eastern Europe to boost profits.
Staffing in western European markets, mainly Italy, Austria and Germany, is to be reduced “which will impact some 9,000 of the 100,000 jobs” in the region, the company said in a statement presenting its strategic plan for 2008-10. “(In) central and eastern Europe, the group will expand its network significantly, while in western Europe the focus will be on optimization, efficiency, restructuring and cost control,” the bank added.
Unicredit said it planned to open 1,300 branches in eastern Europe where 11,500 jobs will be created. The move reflects the attraction of the emerging eastern European economies where incomes are rising fast and consumers are demanding an increasing range of financial products. “For the foreseeable future the CEE-region (central and eastern Europe) will continue to grow much faster than western Europe,” the bank said.
Unicredit, which bought Italian peer Capitalia last year to become what was then the biggest bank in the eurozone and the second-biggest in Europe, says it has the biggest international network in eastern Europe with 3,600 branches. As a result of its expansion in eastern and central Europe, it said revenues from the region would grow at an annual rate of 19%. Group revenues were forecast to increase by 6.7% between 2008 and 2010. The cost-savings and investment would result in growth of net profit per share rising by 10-12% annually, excluding exceptional items, Unicredit said.
Some of the job cuts in western Europe are a result of the takeover of Italian bank Capitalia by Unicredit last year. The Italian leader, which has a market capitalization of €54 billion, has been on an acquisition streak over the last few years, snapping up German bank HVB, Ukraine’s Ukrsotsbank and Kazakhstan’s ATF.
Shares in the bank shed 1.77% to €4,05 in early trading on the Milan stock exchange following its announcement. Its shares have lost over 40% in the past 12 months as a result of the ongoing crisis of the financial markets following the US subprime market collapse. (Economic Times)