UniCredit To Cut 14,000 Jobs In Turnaround Plan

The Board of Directors of UniCredit S.p.A has approved the 2016-2019 Strategic Plan, Transform 2019, which will be presented to analysts and investors at the Capital Markets Day today in London. As announced on July 11, the strategic review encompassed all major areas of the Bank with specific focus on how to reinforce and optimize the Group's capital position, reduce balance sheet risk profile, improve profitability, ensure continuous transformation of operations to allow additional cost reduction and cross selling across Group entities, whilst maintaining flexibility to seize value creating opportunities, as well as further improved risk discipline.

The Transform 2019 plan targets are pragmatic, tangible and achievable and are based on conservative assumptions resting on five well-defined strategic pillars: Strengthen and optimize capital, to align capital ratios with the best in class G-SIFIs. Improve the asset quality, decisive actions to address the Italian legacies via a proactive balance sheet de-risking, an increase of the NPE coverage, and by tightening risk management policies to further improve the quality of new loans origination.

Transform the operating model, increase client focus whilst simplifying and streamlining products and services to reduce the cost to serve customers. Maximize commercial bank value, capitalize on Retail client relationship potential and the "go to" bank status for Corporate clients in Western Europe, further strengthen the leadership position in Central and Eastern Europe and enhance cross selling across business lines and countries. Adopt a lean but strong steering Group Corporate Center, consistent Group-wide KPIs to drive performance, ensure accountability, leaner support functions and transparent cost allocation.

The Group's business model transformation is also expected to bring a further FTE reduction compared to the previous plan. Transform 2019 includes an additional 6,500 net redundancies by 2019 for a total net FTE reduction of c. 14,000 units by 2019, resulting in a decrease of personnel costs by 1.1 billion euro. A reduction of other operating costs by 600 million euro allows the Group to achieve total net annual recurring cost savings of 1.7 billion euro and a cost base of around 10.6 billion euro in 2019, down from 12.2 billion euro in 2015, the majority of which will be achieved in the first 24 months.