While China is seeking to contain a viral epidemic that targets humans, Europe has been fighting an epidemic of its own, one which instead of targeting humans focuses on banks, and instead of a viral vector the European contagion is spread by negative interest rates.
With Deutsche Bank firing tens of thousands of workers in recent years in a desperate attempt to restructure itself into profitability by cutting both muscle and bone, now it is the turn of Italy's largest bank, UniCredit which today announced it expects to cut 6,000 jobs and close 450 branches in Italy as CEO Jean Pierre Mustier sets his three year "efficiency" (read mass layoffs and cost-cutting) plan in motion.
As Bloomberg details, citing a letter sent to unions, the reductions and closures will take place through 2023, and are part of a plan announced in December to cut about 8,000 positions, or more than 9% of the workforce.
While the official narrative is that Mustier is cutting costs and accelerating the cleanup of the balance sheet "as the executive focuses on further simplifying the bank’s structure and improving the way it allocates capital", the real culprit here is Europe's negative rates which have made virtually every lending institution into a melting ice cube as the banking system simply can not function in a world where the cost of money is negative.
Naturally, those who are about to get pink slips, or the Italian equivalent thereof, were not happy.
“Unions are strongly against the job and branch cuts plan,” said Fulvio Furlan, general secretary of Uilca, one of the main banking unions. “Discussions with unions must lead to solutions that limit the job cuts and include a plan of new hirings."
Sorry bank unions, nothing you say will change the fact that thousands among you will soon "learn to code." Feel free to deliver your grievances to the ECB's former head who unleashed this insanity in Europe, and who is now enjoying his retirement somewhere in a highly fortified villa on the shores of Lake Como.
That said, not everyone is a lower: the bank’s strategic plan through 2023 also envisions boosting investor returns through a combination of dividends and share buybacks.
In short, fire thousands of workers to fund buybacks and generated higher returns for shareholdesrs. Ah, capitalism...