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UniCredit to slash 7% workforce in cost-cutting drive
UniCredit is examining an option to trim its headcount as part of the cost cutting measures to enhance profitability of the bank. Towards this, the Italy's biggest bank by assets would cut 10,000 jobs or seven percent of the total workforce.
Most of the job loss would be in Italy, Germany and Austria. The bank has taken up a five-year strategic plan that is expected to be announced in November.
In addition to the 2,700 job cuts already announced for Italy operations, UniCredit is further slashing down the workforce. However, the bank is tight-lipped on job cuts plan.
UniCredit has 146,000 employees in 17 countries. Indicating the alarming situation for employees, according to a source, the bank may not stop after slashing 7,000 jobs, but it could further go upto 10,000 mark.
With the new plan to cut jobs further, the total number of jobs laid off since 2014 reached 15,800 and this accounts for 6.8 percent of the total workforce. The bank is still examining the job cut numbers as it not yet finalized on this. A final decision is expected to be announced by end of this year.
Federico Ghizzoni, Chief Executive Officer, UniCredit, is charting the revival business plan for the bank. The low interest rates are expected to continue in the bleak economic situation. The low interest rate regime will further affect the bank's profitability. This situation is forcing banks to focus on cost controlling rather than measures to boost profitability.
The Italian banking major's strategy also includes that reduction of costs would put the bank on a reasonable scale of operations that will further allay market fears. According to unformed news, the bank is also in favor of share issue, but Ghizzoni often denied this.
The job cuts in Germany and Austria is expected to be 1,500. Initial stage job cuts would be concentrated on streamlining and simplifying the operational structure, while eliminating the duplication in compliance and legal issues handling divisions.
The other European major banks that announced job cuts are UK-based Barclays Plc, Switzerland's UBS Group AG, etc. Banks are forced to trim headcount as they're reeling under severe margin pressure.
Considering the prevailing low interest rates, banks are not in a position to think of profitability, said an analyst.
After the job cuts, UniCredit will also be on par with its competitors in the banking sector as all the major banks are slashing numbers. UniCredit's earning during the first half were euro 1billion, a level that's half of its competitor Intesa Sanpaola.