By Aysu Bicer and Fatih Erkan Dogan ANKARA UniCredit will retain its 50 percent share of Turkey’s Yapı Kredi among its core assets, the Italian banking giant said Monday, despite its recent decision to boost its capital and lower costs in the face of challenges in the EU banking sector. After the bank announced last week that it would cut 11 percent of its workforce across its businesses in Europe and shutter 1,000 branches in Italy, the fate of its shares in Yapı Kredi, Turkey’s fourth-largest lender, had come into question. "Workforce redundance is mainly affecting Western Europe while not affecting [the Central and Eastern Europe] CEE region, nor Turkey. No workforce reduction is mentioned in the CEE plans," the bank said in the last strategic presentation. Banks across Italy are struggling with expectations of low economic growth and pressure from European regulators to meet stricter capital standards. Against that backdrop, UniCredit’s €17.7 billion in bad loans is drawing scrutiny. Despite its woes and efforts to shore up its reserves and boost profits by 2019, UniCredit excluded Turkey from its saving plans, indicating the country as a core part of the group. Yapı Kredi, where UniCredit entered the Turkish banking sector in 2001 with equal shares as Turkey’s Koc Financial Services, is the nation’s fourth-largest private bank, with a 10 percent market share in terms of asset size as of March 2015. UniCredit says now it is focused on profitability via efficiency gains and risk containment and is eager to develop digital banking in Turkey.Performing well According to Koc Holding reports, in the first nine months of the year, Yapı Kredi continued to perform well in terms of profitability and maintained its capital, liquidity, and market share positions. In addition, its consolidated profit reached 2.36 billion liras ($800 million approximately), up 86 percent year-on-year, and the current market value of the bank is around $4.4 billion. Uzeyir Dogan, research director for Gedik Investment, said that Yapı Kredi is among UniCredit’s most valuable assets in terms of growth performance, profitability, and Turkey’s economic outlook and so shedding its shares is not in the cards.
UniCredit plans to keep its 50% share in Turkish bank Yapı Kredi, in spite of a corporate decision to raise capital and lower costs as EU regulators increase their pressure. UniCredit will cut 11% of its workforce and close 1,000 national branches to meet more stringent capital demands from regulators. The bank has €17.7bn of bad loans to offset, but has chosen to keep Turkey as a core part of its operations, with plans to develop digital banking options. In the UK, HSBC is cutting 10,000 jobs over two years, while JP Morgan Chase & Co said it would reduce 12,000 jobs, or about 10% of its workforce, by 2015.