UniCredit SpA is planning about 3,000 new job cuts as Chief Executive Officer Andrea Orcel seeks to focus on profitable businesses and returns as part of the Italian lender's new strategic plan.
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People with knowledge of the matter said that the bank is targeting reductions at its corporate center, where it is trying to reduce bureaucracy and duplication. The people said the final numbers are still being reviewed, and they asked not to be identified as the plan isn't public. Orcel is moving away from an era of restructuring and wants to pivot to growth as part of a strategy update that will be announced next week. Since taking over in mid-April, the former UBS Group AG investment banker has reorganized regional businesses and reshuffled top executives to reduce complexity. After six months of talks with the government because conditions for the rescue of the troubled lender weren't met, he walked away from a deal to buy Banca Monte dei Paschi di Siena SpA.
The bank has already taken a charge on the new round of cuts, adding to about 3,900 job reductions that need to be implemented from the bank's previous strategic plan, which was already agreed with unions and employees. At the end of September, UniCredit, which operates in 13 European countries, had a headcount of about 87,000.
Unicredit's market value was 24.8 billion euro $28.1 billion, up as much as 4.3% in Milan trading and up 4% as of 5 p.m. Stefano Girola, a portfolio manager at Alicanto Capital SGR, said if it proved to be true, it would be positive for UniCredit, as it would make its cost to income ratio, currently at 54.2%, in line with European peers.
The people said that some new hiring is also planned in Italy and will be done on a voluntary basis and eased by generous early-retirement and social support policies. They said a number of hundred positions will be part of the cuts at the bank's international hubs from New York to Tokyo. The bank is moving deposit-taking and lending activity from representative offices to core countries in Europe.
As part of its plans, UniCredit is aiming to centralize its trading activities in Milan, while Treasury activities will be split between the Italian finance capital and Munich. In October, Bloomberg reported that UniCredit is reducing staff in the U.K. and moving most of its London-based trading staff to Milan.
Orcel has indicated that the strategy review is designed to generate higher sustainable returns. The people said that the CEO is going to increase the bank's current dividend policy and focus on more lucrative products and capital-light businesses. He is working to reduce risk and is trying to reduce the number of accords with its partners to distribute insurance products.
In Italy, UniCredit has five different partnerships that are due to expire in the next few years. The Milan-based lender has an agreement with Allianz SE and two other separate partnerships with CNP Assurance in the life segment. The bank has distribution agreements with Unipol Gruppo SpA and Allianz in the non-life business.
According to the people, the bank is in talks with French firm CNP to combine life-insurance join ventures. They said it was trying to reduce counterparts in the non-life business by renegotiating a deal with Unipol.
Orcel wants to improve the terms of a five-year old deal with Amundi SA to distribute asset management products, stemming from the purchase of UniCredit's Pioneer Global Asset Management unit that is due to run until 2026, according to Bloomberg in September.
The lender posted higher-than-expected third-quarter profit aided by lower provisions for bad loans and rising earnings from fees and commissions.
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