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UniCredit to Beat Cost-Cut Target in 2012, CEO Ghizzoni Says

Unicredit Chief Executive Officer Federico Ghizzoni
Unicredit Chief Executive Officer Federico Ghizzoni. Photographer: Simon Dawson/Bloomberg

UniCredit will cut costs this year more aggressively than planned, beating targets approved in November, Chief Executive Officer Federico Ghizzoni said.

“There is a daily battle on costs, and I’m sure we will beat our plan in this respect this year,” Ghizzoni said in an interview on Bloomberg Television in London today. “The worst is over for Italy and for UniCredit.”

Ghizzoni is cutting costs, reducing staff and reviewing the bank’s strategy in central and eastern Europe as part of an effort by the Milan-based bank to boost profitability. It raised 7.5 billion euros ($10 billion) in a rights offer in January to meet capital targets set by the European Banking Authority.

UniCredit, which yesterday announced better-than-expected fourth-quarter profit of 114 million-euro, may resume paying a dividend this year, Ghizzoni said in the interview. The lender plans to cut operating costs by an average annual rate of 0.3 percent in the 2010-2013 period.

UniCredit climbed as much as 2.5 percent and was up 1.3 percent at 4.03 euros in Milan at 10:39 a.m., giving the company a market value of 23.3 billion euros. The Bloomberg Europe Banks and Financial Services Index has gained 16 percent this year, while UniCredit has declined 4 percent.

ECB Drawback

The European Central Bank’s signals that it’s unlikely to extend a third round of unlimited loans to the region’s banks isn’t a concern for Italian banks, Ghizzoni said. He doesn’t see the need for a new round of liquidity unless there is an unexpected “catastrophic” scenario.

“For UniCredit, liquidity is not an issue because we have good access to the wholesale market,” the CEO said. “Things are moving in the right direction. A lot of governments have taken the proper decisions in terms of debt, Italy included.”

UniCredit requested 26 billion euros in the ECB’s two longer-term refinancing operations. The lender has completed 30 percent of its 31 billion-euro needs for 2012, and the total amount is already covered considering borrowings from the ECB, Ghizzoni said.

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