Europe's fourth-largest bank UniCredit laid out bold plans for growth in central and eastern Europe (CEE), where it is already the biggest lender, while cutting back on jobs in western Europe.
In a two-tier strategy for 2008-2010, Italy's second-biggest bank in terms of retail branches said in a statement it would open 1,300 outlets in CEE with the addition of 11,500 jobs, but shed 9,000 posts of 100,000 in Italy, Germany and Austria.
It had a total workforce of about 180,000 at the end of June. UniCredit has already had to sell nearly 200 branches in Italy to meet antitrust requirements.
In its plans to "unleash the full value of Europe's leading franchise," UniCredit confirmed its earnings per share target of 0.52-0.56 euros for 2008 and said it aimed for compound annual EPS growth of 10-12% through to 2010.
UniCredit, the most European of Italy's banks, has suffered more from current financial market storms than domestic rivals such as Intesa Sanpaolo, which have conservative domestic lending policies.
Its job cuts follow other banks trying to cope with financial turmoil caused by the U.S. subprime credit crisis.
Switzerland's UBS AG said last month it was slashing 5,500 jobs or about 7% of its workforce.
UniCredit said the industry was "going back to basics with a strong emphasis on customer relationships, local distribution networks and more traditional products."
It said its plan was "built on the fundamental belief that … banks with a strong franchise and a well diversified revenue base are best protected from uncertainties."
UniCredit reaps around 50% of its revenues from outside Italy and has a presence in 23 countries with over 40 million clients. In the CEE region, it says it has the largest international banking network with over 3,600 branches.
CORE VALUES
UniCredit has already reported credit-related writedowns and losses of 1.726 billion euros ($2.69 billion), it said there had been no additional net writedowns in its ABS portfolio during the second quarter.
It said implementing new guidelines on capital adequacy known as Basel 2 would give it a Core Tier 1 ratio of 5.74%. Analysts had worried its Core Tier 1 ratio — which is based on capital available against the risk perceived in its assets — would not be adequate for growth. The bank, which is worth about 54 billion euros, said it aimed for a Core Tier 1 ratio of 7.1% in 2010. It had previously reported a Core Tier 1 under Basel 1 of 5.5% at the end of the first quarter and aims for 6.0% at the end of this year.
