Troubled Italian lender Monte Paschi has said it would cut thousands of jobs and close hundreds of branches as it continued its efforts to get on its feet again. A huge recapitalization scheme is part of the plan.The world’s oldest bank, Monte dei Paschi di Siena (MPS), announced Tuesday it would slash 2,600 jobs over the next three years. In addition, the number of branches would be cut by about 25 percent to around 1,500 to reduce operating costs by almost 5 percent to 2.4 billion euros ($2.6 billion) in 2019.
The lender’s rescue plan also entails shedding most of its bad loans and recapitalizing with up to 5 billion euros.
MPS wants to transfer up to 27.6 billion euros’ worth of its non-performing loans – that is more than half of its loan portfolio – to a separate, newly created financial entity.
The bank’s board called a shareholders’ meeting on November 24 to approve the measures. “We feel confident that this operation will be concluded successfully,” CEO Marco Morelli said during a conference call with analysts.
The announcement came as Monte Paschi reported a loss of 849 million euros in the first nine months of the year due to losses on toxic loans.
MPS has had a bad run since 2008 when it was caught out by the global financial crisis after overspending on the buyout of smaller lenders. It has required two state bailouts after its top management was convicted of financial crimes.
Speedy progress in the bank’s restructuring could be jeopardized by political factors. Italy is holding a referendum on constitutional reforms on December 4, and if they are rejected, a government crisis is likely to ensue. That could scare investors away from the country, hampering MPS’ efforts to raise capital.
hg/jd (dpa, AFP)