November 30, 2016 / 4:50 PM / a year ago

Popolare Vicenza plans 700 job cuts by January-sources

MILAN, Nov 30 (Reuters) - Italian regional lender Banca Popolare di Vicenza, which had to be rescued this year by bank bailout fund Atlante, plans to cut 700 jobs by the end of the year, three union sources said.

A first meeting to discuss the proposed layoffs, which would be carried out through early retirements and cutting working days, is scheduled for Monday with three more due to take place before Christmas, one of the sources said.

Popolare di Vicenza Chairman Gianni Mion said in October the bank would need to cut between 1,300 and 1,500 jobs, out of a total workforce of 5,400 employees as of mid-2016.

Popolare di Vicenza and nearby Veneto Banca, a local rival which was also rescued by Atlante earlier this year after failing to list, are seen as weak links in Italy’s battered banking system which is struggling under a pile of bad loans left behind by a deep recession.

Like other large “popolari” banks, Popolare di Vicenza has been forced to shed its cooperative status following a government reform in 2015 aimed at improving governance and paving the way for potential mergers.

The bank’s 119,000 shareholders, mostly retail clients, saw their savings wiped out as Popolare Vicenza wrote down the value of its shares by nearly 100 percent when it became a joint-stock company and attempted to list.

Atlante has said Popolare di Vicenza and Veneto Banca have unsustainable costs, which eat up virtually all their income, and has told them to examine a possible tie-up and present a plan by year end to ensure their survival.

The source said some union representatives would like to see the business plan before agreeing to the cuts, but added that it may not be ready in time. Popolare di Vicenza had no comment. (Reporting by Valentina Za and Andrea Mandala; Editing by Elaine Hardcastle)

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