Unicredito announced that it plans to cut about 9,000 jobs as its planned takeover of Germany’s HVB Group goes through. This would lead to a 50% jump in operating income for the two banks.
The combined workforce of the two banks totals 130,000. The 9,000 jobs that they plan to cut will be 7% of it. The bulk of the cuts will happen in Italy, Germany, and Eastern Europe.
HVB accepted an offer of 15.4 billion euros (US$18.7 billion) from Unicredito. The two banks plan to operate banks from Turkey to the Baltic Sea throughout Europe. AP reports:
The deal aims to create what the two banks call the “first truly European bank.” It would be Europe’s biggest ever cross-border banking deal and create a dominant player in the former communist east. Shareholders in both companies as well as regulators must still give their approval.
German reinsurer Munich Re AG, which holds an 18 per cent stake in HVB, said it would examine the offer by Unicredito, but was positive about the offer.
Unicredito and HVB expect to take in a combined operating profit of 8.3 euros this year. They are looking to have the deal come to a close by the end of October.
Shares of both Unicredito and HVB went up about 4% upon news of the banks’ plans. Unicredito will be offering five shares for every HVB share. It will also buy Bank Austria Creditanstalt and BHP, which are owned by HVB.
Investors are hoping that Unicredito will help HVB with risk management. “After the deal is completed, financial discipline will be the key word,” said UniCredito CEO Alessandro Profumo.
Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
