UniCredit's takeover of HVB will lead to job losses
13 June 2005, MUNICH - The UniCredit takeover of Germany's second-biggest bank, HypoVereinsbank (HVB), will lead to thousands of job losses as the new Italian owners eliminate overlaps, executives said on Monday.
13 June 2005
MUNICH - The UniCredit takeover of Germany's second-biggest bank, HypoVereinsbank (HVB), will lead to thousands of job losses as the new Italian owners eliminate overlaps, executives said on Monday.
UniCredit's chief executive Alessandro Profumo said 7 percent of the current workforce in Germany and Austria would be eliminated in addition to cuts of up to 2,400 jobs announced in February at HVB, which has struggled since being hit by bad real-estate loans.
The percentage, announced in a briefing for analysts, would suggest up to 2,000 more jobs in Germany are at risk. The paper said 9 percent of jobs would go in eastern Europe and 2 percent in Italy.
An HVB supervisory board member earlier put a global figure of 9,200 on the layoffs. Klaus Gruenewald, who is a Verdi union official, said UniCredit had agreed to delay job cuts for three years after the takeover.
Profumo and Dieter Rampl, the HVB chief executive, briefed analysts early on Monday and then gave a news conference in Munich, a day after the banks' supervisory boards agreed to Europe's biggest banking merger.
HVB directors recommended shareholders agree to the all-share offer which values HVB at EUR 15.4 billion. UniCredit is offering five shares for each HVB share.
According to Profumo, synergies from the merger will gradually lead to savings of EUR 745 million by 2008.
Rampl added that the two banks had played a vanguard role in mergers of European banks. "That allowed the two of us to each select the best partner," he said in Munich. He rejected the general interpretation that HVB had taken a "junior role".
Five out of 11 UniCredit board members are to come from HVB, with Rampl to become president of UniCredit's supervisory board.
The deal would create the ninth-biggest bank in Europe by market capitalisation.
Rampl declined to rule out further acquisitions in Germany if the protected savings-bank sector was opened to private ownership.
UniCredit is to make the formal offer for HVB at the end of August along with bidding for subsidiaries Bank Austria and Polish bank BPH. In Vienna, the Austrian Takeover Commission said it was examining the parallel cash offer of EUR 70.04 for each Bank Austria share.
UniCredit's takeover dominated the news in Italy on Monday, with lawmakers from across the Italian political spectrum welcoming it.
"This is a very happy day for Italy and Europe," Foreign Minister Gianfranco Fini was quoted as saying. Fini said the deal provided a major step forward on the road of further economic and monetary integration in Europe.
Piero Fassino, leader of the country's largest opposition party, the Democratic Left, said the deal had restored "credibility and confidence to Italy".
The merger comes at a time in which the Italian banking sector is concerned about reports that Italy's banks may be the target of takeovers by foreign institutions.
In Frankfurt, bankers said other German banks might receive takeover offers, but there was little danger of the sector becoming foreign dominated.
"We've got a range of strong institutions and alliances, so one could hardly talk of the German market falling into foreign hands," said Michael Heise, the chief economist of Allianz and Dresdner Bank.
He added that the bid for HVB reflected a view that German banks had successfully cut their operating costs in recent years and were attractive prospects again. "This a key message," he said.
Subject: German news