UPDATE 1-UniCredit execs in restructuring talks-sources

* Plan could fuse at least five Italy units to one-sources

* Sicily union says 7,000 jobs could be lost

* National union says too early to judge plan (Adds source on timing for plan approval, shares)

By Ian Simpson

MILAN, Nov 3 (Reuters) - Executives of Italy's biggest bank, UniCredit SpA (CRDI.MI), met on Tuesday to discuss slimming down the company's corporate structure, sources said, and a union group fears up to 7,000 jobs could be lost.

With UniCredit carrying out a 4 billion euro ($5.85 billion) rights issue to boost capital ratios, the bank's strategy committee is looking at fusing at least five Italian corporate entities into a single bank to cut costs and improve services, two sources close to the issue said.

Chief Executive Alessandro Profumo has long wanted to streamline operations in Italy, one of the sources said. Wrapping up mergers with Germany's HVB in 2005 and Rome bank Capitalia in 2007 has made the Italian structure a next move.

"Now you have the freedom to take another step, to simplify the legal structure in Italy," a source said, noting that the plan is in its initial stages.

A UniCredit spokeswoman had no comment.

The restructuring could affect units UniCredit Banca, Banca di Roma, Banco di Sicilia, Private Banking and Corporate Banking, a source said. The banks' networks would remain, along with the divisional structure.

A source said the restructuring should come before the bank's board in the next few months, probably in January, in order to get the go-ahead from the shareholders meeting in the spring.

UniCredit has about 66,000 employees in Italy. The Sicilian regional unit of bank union FABI estimated that the restructuring could cost 7,000 jobs nationwide.

However, a spokeswoman for FABI's national office in Rome said it was too early to comment on possible job losses.

UniCredit, which is also the biggest bank in central and eastern Europe, had about 168,000 employees at the end of June, down from 174,500 at the end of 2008. It shed about 1,800 jobs in Italy in the first half of the year.

An analyst said the restructuring could lead to savings over the long term but possible layoffs could saddle UniCredit with one-time costs.

"Seven thousand seems like a lot, especially with the costs that are imposed with Italian (employment) laws," said the analyst, who spoke on condition of anonymity.

Shares in UniCredit ended down 2.47 percent at 2.267 euros, in line with the DJ Stoxx banks index .SX7P. ($1=.6835 Euro) (Additional reporting by Gianluca Semeraro; editing by Simon Jessop and John Wallace)