Historic Italian bank Monte Dei Paschi has announced a tough restructuring plan aimed at restoring profitability and reaching ambitious 900m ($1.2bn) in net profits by 2017.
The new plan amends a set of targets and actions launched in June 2012, and contains more drastic measures including a staff cut of 8,000 people from the current total of about 33,000, and the closure of 550 branches in total by 2017. According to the bank, the job cut will bring 500m to the group.
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With the new manoeuvre, Monte Dei Paschi expects to raise more than 2.5bn in capital by December 2014, against the 1bn previously planned.
By that time, the 540-year-old bank aims to pay back about 70% or 3bn of the total European Commission’s state loan it received in February (4.1bn).
Monte dei Paschi also plans to reduce its Italian government bond portfolio to 17bn in 2017, from 23bn in June.
Monte Dei Paschi’s CEO Fabrizio Viola said: "The banks re-launch fell during the announcement of important results in terms of business reorganisation, commercial developing and high cost-savings, despite tough market contest. Now the second phase of the re-launch has started and we will continue executing the restructuring plan and refunding the State’s debt."
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By GlobalDataThe plan will now be sent to Italy’s Ministry of Finance, which then will forward it to the European Commission for final approval. The bank said it hopes to get the commission’s clearance by 14 November when it is scheduled to present its third-quarter results.
Monte dei Paschi’s shares jumped 6.3% at 0.23 at the announcement of the new plan.
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