State-owned Italian bank Monte dei Paschi di Siena (MPS) (BMPS.MI) said on Friday it had booked 925 million euros ($950 million) in charges relating to cutting nearly 20% of its staff, resulting in a 388 million euro third quarter loss.
To fund a generous early retirement scheme and replenish its capital reserves, MPS this month raised 2.5 billion euros ($2.6 billion) in a new share issue, five years after an 8 billion euro bailout that handed the Italian state a 64% stake.
MPS said it had booked the 925 million euros in charges in the period to finance the early exit of 4,125 employees, out of a total of 21,015. That compares with more than 30,000 staff employed by the Tuscan bank ten years ago.
Since becoming an emblem for Italy’s banking problems more than a decade ago, MPS has been steadily shrinking its balance sheet, controlling 4.4% of the Italian domestic lending market at the end of September.
Chief Executive Luigi Lovaglio said the cuts would remove 14% of staff from the bank’s branch network.
“We’ve been working since the very beginning to set up a … commercial plan to ensure full operational services and effective coverage of customers from day one,” he told analysts.
“No negative impact on revenues is expected,” he added.
Lovaglio, a banking turnaround expert brought in by the Italy’s Treasury in February after a sale to rival UniCredit (CRDI.MI) collapsed, is expected to work to improve MPS’ profitability before embarking on a re-privatisation attempt.
“We’re at a turning point in MPS’ life,” Lovaglio said.
MPS said the capital raising had lifted its pro-forma core capital ratio to 14.7% at the end of September, up from 10.8% three months earlier.
Revenues in July-September weakened from the previous quarter, but were up 4% from a year earlier as higher interest rates drove an increase in net lending income that more than offset lower net fees.
Excluding the layoff charges, the bank’s quarterly net profit was 537 million euros after a 407 million euro tax boost.
($1 = 0.9742 euros)