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Italy bank cuts 2600 jobs after $A1b loss

AAP logoAAP 25/10/2016

Troubled Italian bank Monte dei Paschi di Siena (MPS) will cut 2600 jobs over the next three years after announcing a loss of 849 million euros ($A1.2 billion) in the first nine months of the year, due to losses on bad loans.

MPS, founded in 1472 and considered the world's oldest lender, is in the middle of complex restructuring after coming last in European banking stress tests. It is planning to shed most of its bad loans and recapitalise with up to five billion euros.

In a statement, the Tuscan-based bank said losses were "impacted by extraordinary loan loss provisions for EUR 750 million, booked in the third quarter."

It also said it expected to complete the capital increase and bad loans sell off "by the end of the current financial year."

Up to 27.6 billion euros' worth of gross so-called non-performing loans - more than half of MPS' dubious loan portfolio - are to be transferred to a separate, newly-created financial entity, which will pay them 33 per cent of their face value.

MPS' recapitalisation is needed to cover losses stemming from writing down the value of these assets.

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