Intesa Sees $800 Million of Savings After Job Reductions

(Bloomberg) -- Intesa Sanpaolo SpA said it expects to cut annual expenses by about 675 million euros ($800 million) starting in 2021 through job reductions that follow its acquisition of two failed banks from the Veneto region.

The bank has reached an agreement with trade unions to accept all of the approximately 7,500 offers for voluntary redundancy by June 2020, the Milan-based lender said in a statement Thursday. The requests exceed the planned workforce reduction by 3,500 units and will bring the total departures to 9,000, or 9 percent of the bank’s staff.

“This announcement will be well received,” said Hugo Cruz, an analyst at Keefe Bruyette & Woods, reiterating his outperform recommendation on the stock. “These exits will also translate into non-staff cost savings, to be confirmed in Intesa’s new business plan.”

Chief Executive Officer Carlo Messina is working on a new business plan to be announced in February that’s expected to feature expansion in insurance and wealth management. Intesa received 3.5 billion euros from the Italian state to take over the performing assets of Banca Popolare di Vicenza Spa and Veneto Banca SpA after the European Central Bank declared them a lost cause. About 1,000 announced exits will be from the two acquired banks.

Intesa will book a 45 million-euro pretax charge in the fourth quarter related to the job cuts, the company said on Thursday. The bank will hire about 1,500 people on permanent and part-time contracts.

Intesa was up 0.7 percent at 2.81 euros as of 11:48 a.m. in Milan. The shares have climbed about 16 percent this year, giving the company a market value of about 47 billion euros.

“The agreement reached with unions marks a very important step ahead of the upcoming business plan,” Messina said in a separate statement. “The challenges we face are very complex. We are convinced that Intesa will confirm itself as one of the best banks in Europe.”

--With assistance from Dan Liefgreen

To contact the reporters on this story: Ross Larsen in Rome at rlarsen2@bloomberg.net, Sonia Sirletti in Milan at ssirletti@bloomberg.net.

To contact the editors responsible for this story: Neil Callanan at ncallanan@bloomberg.net, Andrew Blackman, Jon Menon

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