Embattled Italian lender Banca Monte dei Paschi di Siena (MPS) has reached an agreement with trade unions to cut thousands of jobs.

The deal, which will see 3,500 employees voluntarily exit through an early-retirement scheme, is part of MPS’ new five-year plan announced last month. 

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Under the new plan, MPS aims to raise €2.5bn to bolster the bank’s capital position.

Employees who take that retirement package will receive 80% of their net pay for up to the seven years, Reuters reported, citing Italian banking union FABI. The pay increases to 85% if they earn less than €2,850 a month.

Banca Monte dei Paschi di Siena chief human capital officer Roberto Coita said: “The agreement confirms the importance of discussions with trade unions for the implementation of the guidelines of the business plan, which provides for the simplification of the Group’s structures with a view to development and growth.

“The agreement reached allows us to start on a shared path that will allow us to seize – also through a return to corporate bargaining and in compliance with the business plan objectives- the opportunities for enhancing our Group’s people, maintaining the focus on the development of internal welfare, training and employment levels.”

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Earlier this week, the European Commission granted an extension to the Italian government for the sale of its stake in MPS and to achieve the revised restructuring targets.

The government rescued MPS in 2017 and acquired a 64% stake in it as part of a €5.4bn bailout.

At the end of 2021, MPS had €138bn on its balance sheet, 21,244 staff and 1,368 branches in Italy.