41733
Merged Italian Banks to Cut 7% Jobs
World Economy

Merged Italian Banks to Cut 7% Jobs

Banco Popolare and Banca Popolare di Milano said they would shed 7% of their 25,000 staff as they merge to create Italy’s third-largest bank by assets.
The 1,800 jobs are to be cut via voluntary departures, and 800 other employees will be reassigned to other jobs, AFP reported.
The number of branches will be cut by 14% to 2,082 by 2019 as the new bank aims to boost net profit from €600 million ($680 million) last year to €1.1 billion in 2019.
But if the effort to improve online banking exceeds expectations, “that could lead us to reduce the network to have 1,700-1,800 branches,” said BPM chief executive Giuseppe Castagna.
That would represent a reduction of up to 30% from today.
Castagna said the new bank “intends to be a leading bank” and that the restructuring plans were “solid and ambitious”.
The merger of the two banks, announced in March, was a major development in the consolidation in Italy’s fragmented banking sector that has been saddled with some €200 billion worth of non-performing loans.
The deal had been delayed as the banks struggled to meet higher capital requirements, weighed down by hundreds of billions of euros of bad loans and weak economic growth.
The banks also plan to sell loans totaling €8 billion where creditors are deemed insolvent over a period of three years to lower the share of gross problem loans to 18% of total lending, from 25%.
A dedicated unit will be set up to manage loans which are unlikely to ever be repaid.
 Thorny ECB Talks
The pace of bad loan sales has been the main sticking point in thorny talks with European Central Bank supervisors.
The ECB granted the deal a preliminary approval only after Banco Popolare committed to raising €1 billion in a share issue that will be launched in early June in order to boost provisions to cover 62% of most problematic loans’ value.
That coverage ratio is set to fall back to 59% by 2019 due to bad loan sales as disposals will start with loans with the lowest residual value—and highest coverage—in an effort to minimize losses.
Despite billions of euros of writedowns, Italian banks on average still value bad loans above their market prices—which mirror the significant returns required by buyers.
BPM CEO Giuseppe Castagna, who will head the new entity, said the merged bank had committed to the ECB to match the coverage levels of Italy’s top three banks: Intesa Sanpaolo, UniCredit and Monte dei Paschi. Shares in Banco Popolare topped Milan’s leader board with a 6.5% gain in late afternoon trading.

 

Short URL : http://goo.gl/JRkHjn
  1. http://goo.gl/XCFWPQ
  • http://goo.gl/SpC4SS
  • http://goo.gl/LcC9nO
  • http://goo.gl/gGnW8h
  • http://goo.gl/MWaalF

You can also read ...

Dow futures dropped more than 100 points in early trading, as traders returned from the long holiday  weekend to face fresh selling pressure for US stocks.
A six-day rebound in world stocks began to splutter on Tuesday...
Indonesia Criticizes Trump’s Protectionist Policies
Indonesia is foregoing billions of dollars on offer from...
Chinese ironworks are increasingly  using Australian ore, which has  a high iron content.
Global stock markets are down from their recent peaks and...
ADB Forecasts India Growth at 7.3 Percent
The Asian Development Bank expects India’s growth to pick up...
Ghana Told to Cut High Agro Imports
The World Bank country director for Ghana, Henry Kerali, has...
London-based Capital Economics expects the German economy to expand by 2.7% this year. This would be above the government’s  more conservative forecast of 2.4%.
The German economy is expected to improve in the next six...
Colombia Expects Better Times
Colombia’s economy could grow 3% this year as sectors like...
GM Seeking  S. Korea Backing
General Motors has offered to convert debt of around $2.2...

Trending

Googleplus