In May 2007, the management groups of UniCredit and Capitalia revealed a plan to merge the two Italian banks. The merger will give rise to the second largest banking group in Europe, and the sixth largest in the world. The possible consequences in terms of employment are not yet clear. The trade unions, which are still waiting to be convened by the banks’ management, estimate that between 3,000 and 9,000 workers are at risk of redundancy.
Since the merger forming the banking colossus Intesa Sanpaolo in August 2006 (IT0609029I), Italian businesses have been waiting for the next move in the so-called ‘banking risiko game’. The official announcement made on 20 May 2007 of the merger of another two banking groups, UniCredit and Capitalia, was therefore anticipated by operators in the sector.
Ongoing restructuring in sector
In the past decade, the banking sector has been characterised by important restructuring processes. From 1998 to 2005, according to the latest official survey by Mediobanca, 47 ‘mega mergers’ took place worldwide. Of these, 21 mergers have involved European banks, to which the recent Italian merger between Banca Intesa and Sanpaolo Imi must be added. In the same period, Italy also saw numerous takeovers of small banks by larger financial institutions. These takeovers generally showed good results in terms of profitability due to the fact that labour costs were lower than in other European countries (see Table).
Revenues and labour costs per employee in the largest European banks
This table highlights the revenues and labour costs per employee in the largest European banks. | | Total earnings per employee | Labour costs per employee |
| | 2005 | % variance on 1998 | 2005 | % variance on 1998 |
| Switzerland | 381,200 | 35.7 | 195,600 | 47.2 |
| Germany | 257,500 | 33.0 | 104,500 | 41.3 |
| Scandinavia | 230,100 | 39.9 | 71,900 | 44.2 |
| United Kingdom | 218,400 | 70.0 | 63,700 | 60.5 |
| Benelux | 212,200 | 22.6 | 74,000 | 23.1 |
| France | 193,400 | 25.9 | 72,100 | 17.9 |
| Italy | 167,300 | 0.9 | 55,900 | -5.6 |
| Spain | 145,800 | 45.1 | 43,000 | 15.2 |
| Europe | 212,400 | 36.5 | 75,800 | 31.9 |
Note: The Benelux countries include Belgium, the Netherlands and Luxembourg.
Source: Mediobanca, 2006
The merger in progress between UniCredit and Capitalia, however, is the most significant in terms of size. The market capitalisation of the new group is estimated at over €100 billion with more than 50% of revenues being earned abroad, which testifies to the European dimension of the group. In total, about 170,000 employees are distributed among a network of 9,200 branches. The group covers around 27% of the domestic market.
Reactions of trade unions and government
The newly-formed group has been welcomed by the government, the Governor of the Bank of Italy (Banca d’Italia), Mario Draghi, and the three main trade union confederations – the General Confederation of Italian Workers (Confederazione Generale Italiana del Lavoro, Cgil), the Italian Confederation of Workers’ Trade Unions (Confederazione Italiana Sindacati Lavoratori, Cisl) and the Union of Italian Workers (Unione Italiana del Lavoro, Uil). However, the sectoral trade unions have been more cautious with regard to the merger, fearing its negative impact on employment. The number of redundancies is not yet known, because the unions are waiting to be convened by the management of both banks. The General Secretary of the Italian Federation of Insurance and Credit Trade Unions (Federazione Italiana Sindacale Lavoratori Assicurazioni e Credito, Fisac-Cgil), Domenico Moccia, has stated that he is ‘ready to negotiate and to expect lay-offs to a similar extent as those announced after the merger between Intesa and Sanpaolo’. The workers who are most at risk are those employed in the various functions that are due to be centralised and streamlined between the two banks, such as the computer companies and the businesses selling the group’s products.
In the meantime, the merger has interlinked with the renewal of the banking workers’ collective agreement. The Italian Banking Association (Associazione Bancaria Italiana, ABI) has asked the trade unions to analyse jointly, at the negotiating table, the change in the situation due to the establishment of the new banking group.
Commentary
In terms of the Italian economic landscape, which is characterised by marked corporate fragmentation and the dominance of small and medium-sized enterprises (SMEs), the ongoing focus on the banking sector is an exception. Whether this is a positive exception will depend on how the large banking groups respond to the demands of businesses, in particular to those that are family run, and of consumers who, until today, have had to accept banking costs that are among the highest in Europe.
Cristina Tajani, Ires Lombardia