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LUIS DE GUINDOS

Spain and Germany mull business funding plans

Spain and Germany on Monday announced joint plans to boost private investment to small and medium-sized Spanish businesses to help drive economic recovery and create jobs in the recession-hit country.

Published: 29 April 2013 18:28 CEST
Spain and Germany mull business funding plans
Spain's Economy Minister Luis de Guindos and Germany's Finance Minister Wolfgang Schaeuble in Loja, near Granada. Jorge Guerrero/AFP

"We have reached an agreement on… the possibility of finding ways to finance investment in small and medium Spanish enterprises that are competitive," Spanish Economy Minister Luis de Guindos said.

"Jobs are created by small- and medium-sized companies and that is where we have to act," he added, at a joint news conference with German Finance Minister Wolfgang Schaeuble in the southwestern Spanish city of Granada.

The German minister said the plan was a "pilot project" that could serve as an example for other nations and whose priority would be to fight unemployment, especially among the young.

The two ministers said each country had appointed an official who would be the country manager for the plan and who would work together to flesh out the details of the project by the end of May.

Schaeuble said the plan would not run "through the usual long journey through European institutions, it will be more immediate, with direct dialogue with banks."

"Both governments are going to try to ensure that this model is implemented as soon as possible and that the money reaches small and medium-sized companies as soon as possible," he added.

UniCredit chief economist Erik Nielsen felt the programme showed that "the German government (like some other governments) has lost faith in the (EU) Commission," which he suggested "is seen as not working properly for the eurozone."

Spain, the eurozone's fourth-largest economy, is struggling through a double-dip recession brought on by the collapse of a property boom in 2008.

The country's unemployment rate hit a record 27.16 percent in the first quarter and was 57.22 percent for those between the age of 16 and 24, the latest figures showed last week.

Spain had 239,688 fewer small and medium-sized businesses in March 2013 than during the same month in 2007, before the collapse of the property bubble which sent the economy into a tailspin, according to Spain's small business association CEPYME.

Small and medium-sized firms complain that they struggle to secure financing from banks, which have been saddled with bad loans since the property market collapsed.

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BUSINESS

Italy’s UniCredit back in black after ‘pivotal’ year

Italian bank UniCredit said on Thursday that it returned to the black in 2017 as an ambitious reorganisation it embarked upon 18 months ago starts to pay off.

Published: 8 February 2018 16:42 CET
Italy's UniCredit back in black after 'pivotal' year
UniCredit's headquarters in Milan. Photo: Marco Bertorello/AFP

UniCredit said in a statement that it chalked up net profit of €5.47 billion last year, exceeding analysts' forecasts.

The year before, one-off items and writedowns had pushed the lender into a net loss of €11.79 billion.

UniCredit said 2017 full-year revenues edged 1.7 percent higher to €19.6 billion. In the fourth quarter alone, net profit amounted to €801 million, compared with a loss of €13.55 billion a year earlier.

“It was the bank's best fourth quarter in a decade,” said chief executive Jean Pierre Mustier. “2017 was a pivotal year for UniCredit.”

The numbers seemed to convince investors, too, with UniCredit shares bounding up 2.7 percent to €17.95, taking it 45 percent higher than a year ago.

UniCredit said its core tier-one capital ratio – a key measure of a bank's underlying strength – stood at 13.6 percent at the end of last year, only slightly below the very solid 13.8 percent seen in September.

The bank said its asset quality had improved with its net exposure to risk or non-performing debt down by 15.2 percent to €21.2 billion.

UniCredit was one of the worst-performing banks in stress tests conducted by the European Banking Authority in 2016. And since he took over as CEO in July of that year, Mustier has embarked on a massive shake-up.

This has included a €13-billion capital increase, the disposal of a number of assets such as Bank Pekao and Pioneer, and a €17.7-billion gross reduction in non-performing loans.

The bank also plans to slash 14,000 full-time equivalent jobs, of which 9,000 have been achieved so far. Since the end of 2015, UniCredit has closed 682 branches or 72 percent of the 944 planned by 2019.

UniCredit is pencilling in net profit of between €3.7 billion and €4.7 billion in 2018 and €4.7 billion in 2019, when the core tier-one ratio is projected to come out at 12.5 percent.