UniCredit to Cut 8,000 Jobs, Launch EUR2 Billion Buyback in New Plan
December 03 2019 - 2:32AM
Dow Jones News
By Pietro Lombardi
UniCredit SpA (UCG.MI) will cut roughly 8,000 jobs and close
about 500 branches through 2023 as it targets gross savings of 1
billion euros ($1.10 billion) in Western Europe, Italy's largest
bank said ahead of its capital markets day in London on
Tuesday.
The headcount reduction is part of the bank's 2020-23 strategic
plan, which targets underlying net profit of EUR5 billion in
2023.
The new plan comes as the bank, like its European peers, faces a
challenging environment, with low interest rates, intense
competition and regulation weighing on profitability.
The bank, which has retail businesses in several European
countries and an investment banking arm, said it would return EUR8
billion to shareholders through 2023, including a share buyback of
EUR2 billion.
It targets a return on tangible equity of at least 8% during the
plan period, with capital distribution reaching 50% at the end of
the plan.
Earnings per share is seen growing 12% a year, while revenue
should rise roughly 0.8% a year to EUR19.3 billion in 2023. Costs
are expected to decline 0.2% a year and reach EUR10.2 billion when
the plan ends.
The bank will book integration costs for Western Europe of
EUR1.4 billion in 2019 and 2020. Of this, roughly EUR300 million
will be for Germany and Austria in the fourth quarter and EUR1.1
billion for Italy next year.
UniCredit launched the plan it completed this year to tackle a
number of issues, including a large pile of bad loans. Under the
strategy, it cut costs, disposed of bad loans worth billions of
euros and sold assets, including Polish lender Bank Pekao SA and
asset manager Pioneer. The lender also raised EUR13 billion of
fresh capital.
More recently, it sold its stakes in online lender FinecoBank
SpA (FBK.MI) and in Mediobanca SpA (MB.MI). Over the weekend, it
reached an agreement to cut its stake in Turkish bank Yapi ve Kredi
Bankasi AS (YKBNK.IS) to below 32% from roughly 41%, in a further
step aimed at simplifying its shareholding structure and boost its
capital.
Write to Pietro Lombardi at pietro.lombardi@dowjones.com
(END) Dow Jones Newswires
December 03, 2019 02:17 ET (07:17 GMT)
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