Unicredit to raise €13 billion amid restructuring plan

Italy's biggest bank, UniCredit, announced plans on Tuesday to slash 14,000 jobs and raise billions of euros in fresh capital as fears of a banking and political crisis grip the country.
The bank, one of the worst performers in European bank stress tests, confirmed it would need to seek 13 billion euros ($13.8 bn) in fresh capital from investors despite political instability in Italy and the nation's third-largest bank scrambling to avoid a government-led rescue.

The bank plans to use the record rights issue to help remove almost €18bn of bad debt from its balance sheet and boost profitability. UniCredit also plans to close about a quarter of its 3,800 branches.

The bank estimated this would save it 1.1 billion euros in staff costs. The bank added it planned to  slash other costs by 600 million euros, resulting in an annual saving of 1.7 billion euros.

Chief executive Jean Pierre Mustier said it was a "pragmatic plan based on conservative assumptions, with tangible and achievable targets".
He added: "We are taking decisive actions to deal with our [problem loan] legacy issues to improve and support recurring future profitability to become one of Europe's most attractive banks."

UniCredit's boss is also aiming to boost its return on equity from 4.1% this year to 9% by 2019, adding it would be difficult for the bank to outperform the target. "Frankly, to say you can do more than that, I don't think in the current environment it is credible," he said.