Banca Monte dei Paschi di Siena to slash 4,600 jobs

Italy’s Banca Monte dei Paschi di Siena, the world’s oldest bank, said yesterday it will reduce its workforce by 4,600 people by 2015, as the struggling lender accepted a state bailout loan.

BMPS said it will borrow roughly €1.5 billion from the government to pay off debt and shore up its capital, and said in its strategic plan for 2012-2015 that it would reduce posts and sell assets.

The Tuscan bank said it would carry out the “necessary procedures” to obtain a bailout loan “estimated at around €1.5 billion” by the end of the year.

BMPS said its new strategic plan would “entail significant capital strengthening, a strict policy to safeguard asset quality, a structural balance of liquidity and no dependence on the European Central Bank.”

The government had offered the struggling bank up to €2 billion in aid in what it described as “urgent measures to raise BMPS’s capital funds” as Italy struggles to stave off debt crisis contagion.

The aid was necessary because the bank had admitted it was “impossible” to find private investors to boost its funds owing to “currently highly volatile market conditions” as the eurozone crisis intensifies, the government said.

BMPS will issue bonds reserved for the state for a total of €3.4 billion to raise the €1.5 billion offered in this bailout, and pay off a government loan taken in 2009 as the financial crisis bit.

The bank has pledged to pay back €3 billion by 2015.

“Asset disposals, group rationalisation and back-office outsourcing actions, in conjunction with early retirement for pension-eligible employees, will lead to a significant reduction in headcount,” the bank said.

It also said it plans to close 400 branches and launch a new online bank.

The bank, which posted a €4.69 billion loss in 2011, has forecast a €630 million net profit in 2015. It said it will re-evaluate its assets and take an impairment charge at the end of June and release the results along with approved half-year accounts.

The financial lifeline will allow the Tuscan bank, founded in 1472, to bring its core tier one capital ratio to nine per cent of total assets, conforming to the rules of the European Banking Authority.

The EBA requires Italian banks to raise extra capital on a temporary basis to offset the risk on holdings of Italian government bonds.