Munich, Rome The new strategic plan by Unicredit boss Andrea Orcel also leads to significant personnel changes at Hypo-Vereinsbank. According to the Handelsblatt, a total of up to 1,500 full-time positions will be cut there over the next three years, especially in the branches and administration. On the other side, 200 jobs are also to be created. “Of course there is a reduction, but also settings,” said CEO Orcel at an online video conference.
While the 58-year-old went into detail in his presentation on the expansion of the workforce by around 1,500 net positions by 2024 in the 13 group countries, he only mentioned possible job cuts in passing. “There will also be departures,” he admitted only when asked. The group currently employs around 87,000 people.
In the run-up to the new Unicredit strategy, there was talk of about 3,000 job cuts in the group. Up to half of this could be attributable to the German subsidiary, a lot about early retirement, it was said last week. Insiders confirmed the Handelsblatt again on Thursday that there are plans to cut up to 1,500 jobs at Hypo-Vereinsbank (HVB). “I’m surprised that it wasn’t an issue today,” they said.
For Hypo-Vereinsbank, the announcement means a significant cut in staffing levels. The number of employees at the Munich subsidiary of Unicredit has been falling for years. As of June 30 of this year, there were 11,537 full-time positions, exactly 537 less than a year earlier. If the new strategy were actually to result in further job cuts, the number of employees at HVB would drop in the direction of 10,000 over the next few years.
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According to information from the Handelsblatt, the number of branches is also up for debate. HVB had already reacted here in the middle of the last decade and closed almost every second branch. Currently there are still more than 300, of which, however, some are to be merged or closed in the next few years. “Unfortunately, the reality is that customer behavior has changed significantly and branches are less and less frequented,” the bank said. Just two weeks ago, Marion Höllinger, the new board member for private customers, rolled out the bank’s new smart banking concept, in which customer communication via online channels should work in the same way as in the branch.
The personnel decision is a further step in the restructuring of HVB. Unicredit gave its most important foreign subsidiary more freedom in the summer. Since then, Hypo-Vereinsbank has been managed as a separate geographical unit like its home region of Italy. The further thrust was already evident: Complexity and duplicate structures are to be abolished, processes within the group are to be simplified.
In the previous Unicredit structure, Italy and Germany were combined under the Western Europe region. Because this level was no longer available, HVB boss Michael Diederich has been reporting directly to Orcel ever since. Unlike his predecessor Jean-Pierre Mustier, Orcel also took over the chairmanship of the supervisory board at Hypo-Vereinsbank. More independence there also means more control by the parent company. Internally, however, Diederich always emphasizes that he explicitly wanted Andrea Orcel as the top supervisor of his bank.
Orcel relies on data and digitization
The new Unicredit boss, however, put other things in the foreground on Thursday. By 2024, he wants to increase the surplus to more than 4.5 billion euros, said the 58-year-old. For the current year, the surplus should be more than 3.3 billion euros.
On the 83 pages of his strategy paper it becomes clear that Orcel wants to make the group much more digital. The complex “silo model” of the 13 banks is to be broken up. Orcel wants the same technologies and data platforms for everyone, and customer service is to be standardized. Unicredit plans to invest around 2.8 billion euros in this.
In addition to HVB, the group from Milan also includes Bank Austria in Austria and various holdings in Central and Eastern Europe. Orcel wants to continue to respect the local roots of the individual banks. But he also wants to use the collective more and the resulting synergies.
The group has more than 15 million customers in total, “that’s a lot of data,” Orcel emphasized in his presentation. But it seems that Unicredit is not making sufficient use of this knowledge. “We have to know our customers better – and we will,” announced Orcel.
Unicredit aims to become a digital bank as quickly as possible, powered by data. “When it comes to data, we still lose to fintechs,” Orcel admits. The man who previously worked at the US bank Merrill Lynch and later headed investment banking at Swiss UBS wants to change that as soon as possible.
Hypo-Vereinsbank should become more profitable
Orcel has set itself tough goals for the German market, too: sales there are expected to grow by two percent annually. He announced a net profit of more than one billion euros by 2024. The Hypo-Vereinsbank should also increase its profitability: the surplus in relation to the allocated equity capital (RoAC) should increase from currently around seven percent to ten percent, Orcel explained.
With its new strategy, Orcel wants to achieve “significantly increased and growing equity returns”. At the same time, the business is to be expanded and the solid capital strength of the bank is to be maintained. His aim is to position the bank for “long-term success and stability” beyond 2024. He is proud to lead Unicredit through this next phase.
In the period from 2021 to 2024, Unicredit also wants to make its shareholders even more happy. In total, at least 16 billion euros are to be distributed to investors during the period. A disbursement of 3.7 billion euros is planned for 2022. 30 percent of this is due to the dividend, the rest to share buybacks.
Unicredit share increases significantly
The Unicredit share, which is listed on the Milan stock exchange, increased significantly after the new strategy became known and was at times more than eleven percentage points up. Orcel, who succeeded the French Jean-Pierre Mustier in April, took more than half a year to devise his new strategy.
Only six weeks ago his planned deal with the crisis bank Monte dei Paschi di Siena fell through. Unicredit wanted to buy the Tuscan institute from the Italian Ministry of Finance in order to further strengthen its position in its home market, especially in terms of the number of branches. But Orcel apparently demanded an excessive capital increase by the state in return, and negotiations broke off after several weeks.
He also made it clear on Strategy Day that Orcel wants to continue growing. But which takeover candidates are available – the new Unicredit boss is also keeping silent about this.
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