Italy's largest lender, UniCredit, has confirmed plans for a major capital increase as it scrambles to raise funds amid market uncertainty. The bank said it would also have to cut thousands of more jobs to save costs.
Italian bank UniCredit on Tuesday said it planned to secure 13 billion euros ($13.8 billion) for a badly needed capital increase by June of next year.
The country's biggest lender needs to raise fresh funds at a time when investors' confidence has been shaken by the collapse of former Prime Minister Matteo Renzi's government.
Italy's banking sector is in a perilous state, with the world's oldest lender, Monte dei Paschi di Siena, scrambling to put together a private-sector rescue after losing 80 percent of its market capitalization in the past year.
UniCredit's own recapitalization program is part of a major strategic review launched under Chairman Jean-Pierre Mustier and involving selling off assets to strengthen the bank's capital increase.
In order to minimize future risks, UniCredit is aiming to sell toxic loans to the tune of 17.7 billion euros.
The bank also said that a further 6,500 jobs would have to be cut by 2015, bringing the total of lost positions to 14,000 in the wake of the restructuring program.
hg/jd (AFP, Reuters)