UniCredit to raise billions and cut 14,000 jobs

UniCredit, Italy's biggest bank, is planning to raise €13bn (£10.9bn) and cut 14,000 jobs over the next two years in a bid to return to financial health. 

The bank plans to use the record rights issue to help remove almost €18bn of bad debt from its balance sheet and boost profitability......

UniCredit also plans to close about a quarter of its 3,800 branches.

The move comes as Italy's third-largest bank, Monte dei Paschi di Siena, tries to avoid a government bailout.

'Pragmatic plan'

Shares in UniCredit, whose financial health is considerably worse than its European rivals, initially fell before rising more than 8% on the Milan stock exchange.

However, the shares has fallen by almost than half this year and the bank will be seeking to raise nearly as much as its market value.

Chief executive Jean Pierre Mustier said it was a "pragmatic plan based on conservative assumptions, with tangible and achievable targets".

He added: "We are taking decisive actions to deal with our [problem loan] legacy issues to improve and support recurring future profitability to become one of Europe's most attractive banks."

The cash call will take place in the first three months of the new year, with the funds used to remove €17.7bn of bad debts from its balance sheet.

The bank aims to get its core capital ratio - a key measure of financial strength - above 12.5% by 2019, as well as post net profits of €4.7bn and resume dividend payments that year.

The job cuts will amount to about 11% of its workforce.

UniCredit's plans come as a new government takes office in Rome following the decision by prime minister Matteo Renzi to quit after losing a referendum vote over constitutional change. Elections are also expected next year.