Financial institutions have struggled to make decent profits for quite some time now. As a result, banks are often forced to make unpopular decisions in an effort to remain competitive.
In Italy, UniCredit bank has decided they will let go of 8,000 employees over the next three years.
Contrary to what most consumers may think, there are a lot of problems for financial institutions to contend with. Particularly when it comes to them making money and turning a profit, the number of viable options has seemingly decreased significantly.
Most banks also have shareholders they must keep happy at all times, which makes for a very tough balancing act.
Italy’s UniCredit, which is the largest bank in the country, is facing the pressure just like its competitors. So much even that the institution announced a new three-year plan.
A big part of that plan is how up to 8,000 employees will be let go as a way to improve overall profitability.
On the one hand, UniCredit wants to achieve a revenue of $21.4bn by 2023. On the other hand, the bank wants to increase shareholder value, even if that means laying off a portion of its staff. It is a decision that will not sit well with the bank’s employees, for fairly obvious reasons.
Pleasing shareholders is very difficult under the current financial circumstances. One has to wonder if that should ever come at the cost of firing thousands of people.
The timing of this announcement couldn’t be worse either, with Christmas just around the corner.
More Cost-Cutting Measures
Firing 8,000 people over a three-year period alone isn’t sufficient to keep UniCredit in the shareholders’ good graces. The bank will also close 500 branches to help reduce overhead costs.
Furthermore, the goal is to become a paperless retail bank in Italy next year, and to the same in Austria and Germany by 2021.
Italy will be hit the hardest. Three quarters of these restructuring plans will occur in the Southern European country.
It is believed that 450 of the 500 branch closures will occur in Italy. Additionally, 70% of the layoffs will affect this nation as well.
Italy has struggled financially for some time, and this UniCredit move will only make the situation worse.