MILAN – Italian state-owned bank Monte dei Paschi di Siena reached an accord with unions over thousands of job cuts which are part of commitments Rome agreed this week with the European Commission, the sector’s biggest union FABI said.
The deal will see 3,500 Monte dei Paschi employees relatively close to the pension age leave by Nov. 30 through a generous early retirement scheme, used by lenders in Italy and financed by the individual banks.
Staff who take the package will receive 80% of their net pay for up to seven years. The percentage rises to 85% if they earn less than 2,850 euros a month.
Those who sign up will also retain healthcare benefits and retain the favourable loan terms reserved for employees during the period.
The costly accord inflates the bill for Italian taxpayers who in 2017 spent 5.4 billion euros to rescue Monte dei Paschi and are now set to shoulder nearly two thirds of a new 2.5 billion euro cash call.
Monte dei Paschi, which had no immediate comment, is expected to use more than a third of the proceeds to fund the exits.
The state will contribute to the capital raising based on its 64% stake in the bank.
Gathering the rest of the money from investors after the summer is expected to prove a challenge for CEO Luigi Lovaglio given difficult market conditions.
FABI said unions would meet in future with Monte dei Paschi to agree new hirings to replace 50% of the exits over the course of a business plan through 2026.
Lovaglio, who took over at MPS in February, last month unveiled the new plan, after the Treasury failed to clinch a sale to UniCredit last year and had to secure an extension of the privatisation deadline from the EU.
The latest accord with Brussels, with the extended deadline and new restructuring goals was announced on Tuesday, ahead of Lovaglio’s first set of results on Friday.
(Reporting by Valentina Za, editing by Maria Pia Quaglia and Keith Weir)
