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October 25, 2016updated 04 Apr 2017 12:43pm

Monte dei Paschi to shed 2,600 jobs and close 500 branches

Troubled Italian bank Banca Monte dei Paschi di Siena has announced plans to axe 2,600 jobs, shut down 500 branches, and sell business units to boost profitability.

Troubled Italian bank Banca Monte dei Paschi di Siena has announced plans to axe 2,600 jobs, shut down 500 branches, and sell business units to boost profitability.

The move will reduce its number of branches from 2,000 to 1,500; and lower personnel costs by 9% to 1.5bn in 2019. The bank also intends to accelerate the digitalisation process and put more focus on its retail and small business channels.

At the same time, the bank is also planning to offload its merchant acquiring payment processing unit and its platform to recover bad debt.

It also plans to sell its merchant acquiring business and bad-loans recovery unit. The bank said that it already received a €520m offer from Istituto Centrale delle Banche Popolari Italiane for the merchant acquiring unit.

The bank said that these measures are aimed at achieving net profit of at least €1.1bn, return on tangible equity of 11% and cost-to-income ratio of 55% by 2019.

The new business plan comes as the lender posted a net loss of €1.15bn for the third quarter, compared with a net profit of €255.8m a year ago. The loss was mainly driven by provisions for bad loans. Earlier this year, the bank announced plans to raise €5bn in capital and dispose €28bn of bad loans.

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