UniCredit’s German Unit Is Set to Take Half of Fresh Job Cuts

(Bloomberg) --

UniCredit SpA's German operations are set to take about half the group's planned job cuts as the firm seeks to boost profitability at the underperforming unit.

Chief Executive Officer Andrea Orcel plans to eliminate about 1,500 positions at subsidiary HVB as part of his new strategy that's slated to be unveiled next week, people familiar with the matter said. Those would come on top of existing workforce reduction programs, the people said, asking not to be named discussing private information. 

The combined effect could decrease HVB's headcount by as much as 30% over coming years, the people said, adding that the figures aren't final.

A UniCredit spokesman declined to comment.

Orcel, a former UBS AG investment banker, is set to announce a fresh round of about 3,000 cuts as part of a planned pivot toward growth and away from an era of restructuring under predecessor Jean Pierre Mustier, people familiar with the matter said this week. Since taking over in April, he's reorganized regional businesses and reshuffled top executives.

Read More: UniCredit Plans About 3,000 Job Cuts Under Strategic Plan

The newly planned job cuts at HVB would add to several thousands that were announced under Mustier but are still to be fully implemented. Total reductions resulting from the combined plans could slash headcount at the German unit to as low as 8,000 over the coming years, though final cuts could be less strong, they said. That would be down from about 11,500 at the end of June. Orcel's cuts are focused on back-office operations, the people said.

HVB's efficiency has been significantly below the group's for years, despite various restructuring efforts under previous leaders. Still, the unit's headcount has fallen by more than 40% from 19,400 over the past decade, while the number of branches dropped from 934 at the end of 2011 to 577 at the end of the current year's first half.

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