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UniCredit SpA Chief Executive Officer Jean Pierre Mustier will reward investors with 2 billion euros ($2.2 billion) of share buybacks in a new four-year strategic plan that will see about 8,000 job cuts, as the Italian bank grapples with slow economic growth and negative interest rates.
The Milan-based lender, announcing its new plan through 2023, said it will boost shareholder remuneration through a combination of dividends and share repurchases. The job cuts, equal to more than 9% of the workforce, will in part come through the closure of about 500 branches. UniCredit also announced a separate buyback equal to 10% of 2019 earnings.
Mustier is seeking to drive investor returns through cost cuts and greater efficiency while signaling that the bank is struggling to boost growth in an era of negative rates. Revenue and costs are expected to be little changed through 2023, with the bank focused on eking out what it can on its own rather than attempting major deals.
UniCredit expects to deliver 1 billion euros of savings in Western Europe, partially achieved through the job and branch cuts. The expected 1.4 billion-euro cost of the initiative will be booked in 2019 and 2020.
The CEO will focus on further simplifying the bank’s structure and improving the way it allocates capital. UniCredit plans to create a sub-holding company to control its international businesses and it will further reduce its non-performing loans.
Further details of UniCredit’s targets:
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