UniCredit is planning to raise 13 billion euros to leave the banking crisis
The largest bank in Italy, UniCredit, is planning to raise 13 billion euros to leave the banking crisis by creating the biggest-ever share issue.
While Monte dei Paschi di Siena risks failure, Italy risks early elections and is facing a new government. UniCredit announced its plans on Tuesday, adding that 14,000 jobs will be cut.
Chief Executive Jean Pierre Mustier declared that UniCredit is planning to launch the share issue in the first months of 2017. The collected money will be used to help Monte dei Paschi di Siena to erase 17.7 billions euros from its debts list and to enhance its profits by the year of 2019.Almost 11% from UniCredit staff will be cut starting December 2015. This means almost 14,000 jobs that will be shed. The bank's capital ratio will be rose to 12.5% by the year of 2019.
And while UniCredit expects that its net profit will grow by 4.7 billion euros in 2019, is project income will grow with 0.6% per year, revenue mainly coming from commissions and fees.
Jean Pierre Mustier declared that he's confident in Mone Paschi bank and he believes that little impact will be felt by Unicredit's capital increase. "I am highly confident Monte Paschi will be resolved by year-end and so it will have no impact on our capital increase."
UniCredit's prosperity relies on investors willing to believe that the plan is a good and long-term solution.
Italy is ready to leave Monte dei Paschi if the bank fails to pay its minimum part of the debt, of 5 billion euros if it wants to exist in the business.
The European Central Bank gave an ultimatum to Monte dei Paschi di Siena to raise the money by the end of the month.
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