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UniCredit shocks with 14 billion euro balance sheet clean-up

UniCredit shocks with 14 billion euro balance sheet clean-up
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Leading Italian bank UniCredit has posted a massive loss of 14 billion euros for 2013.

Much of that was as it wrote off bad loans that it knows will never be repaid, along with so-called goodwill – the paper value of assets – in Italy, Austria and central and eastern Europe.

The writedowns are to clean up its balance sheet ahead of checks on the financial health of European lenders by the region’s regulators.

Without them Unicredit would have made a 916.5 million euros net profit in 2013, according to the consensus of forecasts from a poll of analysts carried out by Thomson Reuters

It will also cut 8,500 jobs by 2018 There will be 5,700 layoffs in Italy, 1,500 in Germany and 900 in Austria.

The bank sharply wrote down the value of its acquisitions since 2005 which was when it became a major force in Europe through the purchase of Germany’s HypoVereinsbank and its extensive operations in Central and Eastern Europe.

It will sell its Ukrainian subsidiary and has set aside 600 million euros to cover losses on that.

Unicredit is also planning to list its Fineco online banking unit and to sell its bad loans management unit.

The moves were welcomed in the financial markets which noted Italy’s biggest bank in terms of assets is not going to have to raise more capital.

UniCredit’s shares rose 6.04 percent.