July 24 (Bloomberg) -- Banca Popolare di Milano Scrl, Italy’s oldest cooperative bank, said it plans to reduce costs and eliminate jobs as the lender seeks to boost profit.
Italy’s sixth-biggest bank is targeting net income of 270 million euros ($326 million) in 2015, compared with 614 million euros of losses in 2011, the Milan-based lender said in a statement today. The bank plans to cut 700 jobs in the next three years, including a 25 percent reduction of its managers.
Chief Executive Officer Piero Montani, who replaced Claudio De Conto in January, and Chairman Claudio Bonomi are reorganizing the bank to boost profit and strengthen capital because it must repay 500 million euros of state aid obtained in 2009. The lender said it may sell assets unrelated to its main business as well as make “liability management operations.”
Kepler said in note earlier today it was expecting cost-cutting moves as well as refocusing on traditional commercial banking activities.
The bank said the job reductions will save about 65 million euros by 2015. Popolare Milano aims to reduce its administrative expenses by 12 percent, bringing its cost-to-income ratio to 56 percent in 2015. The bank also is carring out an impairment test, which may lead to additional writedowns of its goodwill.
Net income rose to 64.3 million euros in the first three months of the year from 42.3 million euros a year earlier, it said May 15. Popolare Milano’s core tier 1, which was at 8.3 percent at the end of March, is expected to exceed 9 percent by the end of 2015.
Popolare Milano shares fell 1.1 percent to 31.59 cents today, giving the company a market value of 1.02 billion euros. The targets were released after trading closed.
To contact the editor responsible for this story: Frank Connelly at email@example.com