Unicredito and HVB To Cut 9,000 Jobs Upon Merger
If the planned merger of Unicredito and Germany’s HVB Group goes through, the companies plan to cut 9,000 jobs. This would lead to a 50% jump in operating income for the two banks.
Together, the two banks have 130,000 employees. The 9,000 jobs that they plan to cut will be 7% of the workforce. Most of the cuts will happen in Italy, Germany, and Eastern Europe.
“We welcome the strategic initiative of our cooperation partner HypoVereinsbank in entering this cross-border banking deal,” said Munich Re AG Chairman Nikolaus von Bromhard. “As a major HypoVereinsbank shareholder, we will carefully review the share swap offered by Unicredito.”
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.