Monte dei Paschi job cuts will all be voluntary, union says

Italy’s main banking union on Tuesday sought to allay concerns over job cuts at Monte dei Paschi (BMPS.MI) which are needed to pave the way for a possible sale of the state-owned bank to UniCredit (CRDI.MI).

UniCredit last week agreed to enter into exclusive talks with the Treasury to buy “selected parts” of Monte dei Paschi (MPS), which is 64% state-owned after a 2017 bailout.

The two parties have 40 days, barring an extension, to agree a deal on the terms set by UniCredit, which wants the acquisition to boost its earnings per share by at least 10% and its capital to be unaffected.

The potential sale has caused an outcry among Italian politicians, who are urging the government to protect MPS’ 21,000 workers and Siena’s local economy.

“I don’t understand all the alarm on this topic,” Lando Maria Sileoni, chief of banking union FABI, told Italy’s Radio 1.

“The banking sector has a fund to send people into early retirement up to seven years before they actually qualify for their pension: through this system 70,000 workers have opted to retire early [over the past decade], nobody has been fired.”

The fund is financed by banks that need to use it, and each bank bears the cost of its own redundancies. In MPS’ case the state would need to fund the early exits, Sileoni said.

The cost for the state’s coffers is estimated at around 1.4 billion euros based on expected job cuts at MPS of up to 7,000.

UniCredit is currently selecting the parts of MPS it may buy and has said its goal is to boost its presence in Italy’s wealthier centre-north, targeting in particular MPS’ franchise in the Tuscany, Lombardy, Emilia Romagna and Veneto regions.

UniCredit CEO Andrea Orcel said the bank would try to buy as much as possible of MPS’ branch network, while avoiding overlaps where UniCredit is already present.

State-owned bank MCC is expected to take on MPS’ branches in Sicily, Puglia and possibly also in Rome that UniCredit is set to leave behind, a person close with the matter said.

A solution needs to be found for MPS’ central offices, which employ 1,400 people in Siena alone, rising to 4,000 when offices in other locations are included, people familiar with the matter said.