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1,800 jobs to go as part of Italian bank merger

AFP
AFP - [email protected]
1,800 jobs to go as part of Italian bank merger
BPM is merging with Banco Popolare. Photo: Giuseppe Cacace/AFP

Banco Popolare and Banca Popolare di Milano said on Monday they would shed seven percent of their 25,000 staff as they merge to create Italy's third-largest bank by assets.

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The 1,800 jobs are to be cut via voluntary departures, and 800 other employees will be reassigned to other jobs.

The number of branches will be cut by 14 percent to 2,082 by 2019 as the new bank aims to boost net profit from €600 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 percent 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.

Only in April did Italy's banking sector agree on a €5 billion fund on Monday to take on bad loans and guarantee that weakened banks can be recapitalized.

Shares in Banco Popolare topped Milan's leader board with a 6.5-percent gain in late afternoon trading.

BPM was up 1.4 percent, while the FTSE Mib index gained 0.26 percent overall.

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