Banks all over the world struggle to turn a decent profit. UniCredit, a financial institution active in different regions, will be slashing its workforce by another 6,000 in the coming three years.

UniCredit Favors its Shareholders

A financial institution on the scale of UniCredit is struggling. That often doesn't bode well for the rest of the financial industry by any means. Following various setbacks and issues, the bank has to downsize significantly. Its initial plan to cut thousands of jobs was announced back in December of 2019.

At that time, the bank estimated roughly 8,000 employees would be let go. That number has now been reduced to 6,000, but the effect remains virtually the same. A total of 450 bank branches will be closed in Italy over the next three years. 

These measures are taken for one simple reason: boosting shareholder value. Every financial institution has shareholders to report to. If share prices do not meet expectations multiple times in a row, severe unrest will be created. UniCredit is willing to sacrifice its Italian workforce for the benefit of shareholders. 

Is the Plan Viable?

Over the next three years, the goal is to increase net profit to 5 billion Euro. Moreover, the bank wants to return 8 billion Euro to its shareholders by buying back shares. A very ambitious plan, but one that is not necessarily realistic. Job cuts and branch closures will offer short-term relief, but may create new problems further down the line. 

It is expected that more job cuts and branch closures will occur in different regions. Both Austria and Germany have been named as possible targets. 

Given the rise of digital banking, the closure of bank branches isn't too surprising. Roughly 45% of UniCredit's customers already engage in digital banking. The institution aims to reach 60% adoption over the coming years.  Achieving all of these lofty goals in such a short span of time may prove extremely challenging.