UniCredit, Italy's largest bank, has reported a massive €10.6 billion net loss for the third quarter. The bank also announced plans to raise new capital and slash thousands of jobs.
After UniCredit reported its enormous losses, which compared with earnings of €335m in the same period a year earlier, trading in its shares was suspended briefly in Milan.
The bank said in a statement that the loss was due to a writedown of €8.7 billion on the value of acquisitions, including of entire operations in Ukraine and Kazakhstan. It also includes the writedown of €135m in Greek debt, and additional losses on other subsidiaries.
"The group's quarterly financial performance was significantly hurt by market volatility, which led to a trading loss and an increase in net writedowns in loans," the bank said in a statement.
The bank lost €285m in trading, compared with trading earnings of €381m a year earlier. Losses on loans were up 13% to €1.8 billion.
The bank said the writedowns had no impact on its capital ratios, which it is trying to improve by raising cash. It has proposed a capital increase of €7.5 billion, which it said would strengthen its core Tier 1 ratio, a sign of a bank's health, to 10.35% by September 1, well above the 9% level required by new accounting rules.
The bank also said that it would reduce its staff in Italy by 5,200 by 2015, part of a five-year strategic plan. The bank aims to achieve a net profit of 6.5 billion by the end of the business plan by turning around the Italian business, refocusing its central European operations more selectively, and reducing and simplifying operations in mature markets. No dividend will be paid in 2011, the bank said.
