According to four people familiar with the matter, an informal move to sell its lossmaking Austrian business over the summer sparked no interest. Management is now in talks to sell the Austrian retail operations to Vienna-based bank Bawag although a deal remains far from certain, three people said.
Job cuts, which on top of 5,000 already announced would account for about 7 per cent of UniCredit's workforce, will come from Italy and Austria but have a focus on its German back office and investment bank, according to three people. The focus of the plan is to cut cost-to-income ratio of about 80 per cent in Germany and Austria.
To offset any additional hit to capital from restructuring charges, management will seek to avoid a fourth capital call in seven years by raising money from more disposals. Additional asset sales under consideration include its remaining stake in its Polish-listed business and holdings in retail bank Fineco and investment manager Pioneer, the people said.
Assuming this is a successful strategy, UniCredit's management team — including Mr Ghizzoni — will stay in place. "The aim is to avoid a capital increase because if that happens the management will be sent home," said one person directly involved in the process.
UniCredit declined to comment.
UniCredit is being squeezed by the low interest rates on its lending, volatility in key markets in Ukraine and Russia, and weak growth in Italy. Its home market accounts for 70 per cent of group provisions and 80 per cent of group gross non-performing loans according to Citi research.
Azzurra Guelfi, Citi analyst, considers the revenue outlook in UniCredit's previous plan was too optimistic and expects group revenues will be 5 per cent to 7 per cent below management targets in the core divisions for 2016.
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