UniCredit Announces Further Layoffs

The consumer banking division of UniCredit SpA, the largest bank in Italy, probably reached rock bottom in the crisis curve in the third quarter of 2009 and depends on the speed of economic recovery and higher interest rates in order to improve its performance, according to Deputy Chief Executive Officer Roberto Nicastro, who is in charge of this division.

He explained that the consumer banking division of UniCredit SpA had shed 1,800 jobs since the beginning of the year and was planning to cut another 400 jobs by the end of the year plus an additional 2,000 jobs in 2010. The net interest income of the consumer banking division of Italy"s largest bank has been decreasing, because of lower interest rates and a stagnating volume of disbursed loans, Nicastro added. According to him, UniCredit operates in 22 countries and generates nearly 20 per cent of its profit and 30 per cent of its revenue from the consumer banking division.

UniCredit is the largest lender in the emerging Europe, ranked by the value of the assets. "Some countries in Central and Eastern Europe seem to show a better economic outlook. The economic recovery in the core European countries will be tougher and affect the banking activity," Nicastro noted.

UniCredit controls banks in Poland, Romania, Ukraine, Hungary and Slovakia and does not intend to make any other acquisitions in the region in the near future. "It is premature to think about expansion plans. The keyword is the stability after the crisis," Nicastro said.

The bank is considering measures to improve capital ratios, including the possibility of selling bonds to the Italian Government and asking for State aid in Austria. A decision in this respect will be made by the Board of Directors, scheduled to convene on 29 September, Nicastro announced.

UniCredit announced a 74 per cent plunge in profit to 490 million EUR at the end of the second quarter, following a nearly 400 per cent rise in provisions for potentially bad loans to 2.4 billion EUR. Roberto Nicastro is confident that the provisions for potentially bad loans would be smaller in the third and fourth quarters.