Directions: Read the following passage and answer the questions that follows.
This is no time to be timid. Or so Jean-Pierre Mustier seems to think. On December 13th, after five months in the job, the chief executive of UniCredit presented his plan for Italy’s biggest bank. He didn’t hold back. UniCredit is shedding €17.7bn worth ($18.8bn) of bad loans, taking a one-off provision of €8.1bn. It will save €1.7bn a year by 2019, cutting 6,500 jobs on top of 7,500 previously announced to shrink its workforce by 14%. And in a rights issue next year it will raise €13bn—just €2bn less than its market value before the announcement. The markets lapped it up: the shares gained 16%, before retreating the next day.
Mr Mustier had already been busy. The previous day UniCredit sold Pioneer, its asset-management arm, to France’s Amundi (though it will still distribute Pioneer’s products). It recently unloaded its stake in Bank Pekao, in Poland, as well as 30% of Fineco, an Italian online bank of which it will retain control. The bad-debt write-down, restructuring costs and other bits and bobs will partially offset the gains from these sales and the rights issue. But the boss expects UniCredit’s ratio of equity to risk-weighted assets—a gauge of capital strength—to rise from 10.8%, second-weakest among the euro zone’s most important banks, to at least 12.5% by 2019.
UniCredit has already tapped shareholders twice since the financial crisis, for €4bn in 2010 and €7.5bn in 2012. Not long ago analysts thought it might have to beg for another €4bn-9bn. Asking for €13bn may therefore appear unduly bold.
Perhaps boldness is in order. The bank has been in a rut for years. Although less than half its revenue comes from Italy, it has been weighed down by its homeland’s woeful economic performance and a heavy burden of dud loans. Of its €49.7bn (gross) of non-performing Italian debt marked “non-core”—for eventual disposal—€43.2bn-worth dates from 2010 or earlier: high time to clear it out. In April Atlante, a new bank-rescue fund, took over UniCredit’s guarantee of a €1.5bn share sale by an ailing smaller lender. That embarrassment helped to seal the fate of Mr Mustier’s predecessor, Federico Ghizzoni.
Even after this week’s leap, UniCredit’s shares were trading at below one-third of net book value. They are down by about half this year. Mr Mustier is scarcely promising the moon: just a “simple, pan-European commercial bank” with a return on tangible equity of 9% within three years, more than double 2015’s figure but still less than the estimated cost of equity. He is budgeting for revenue to grow by just 0.6% a year, as low interest rates drag down income from lending. Better asset quality will help: default rates are falling. So will cuts, both at head office and in the field: 944 branches will go in Italy, Germany (where UniCredit owns HypoVereinsbank, ranked fourth by assets) and Austria (Bank Austria, second).
Italy’s biggest bank may at last perk up. Its third-largest and the world’s oldest, alas, is tottering. The European Central Bank is insisting that Monte dei Paschi di Siena raise €5bn in equity by the end of the year. Although bankers are persevering with a private-sector plan, a state rescue looks likely. Under European rules, that means pain for retail bondholders. Italy’s banking woes are far from over.
- Why the bank has been in rut for years?
A) bankers are persevering with a private-sector plan
B) weak economic performance
C) burden of bad loans
D) Both B&C
E) None of these
- Define: promising the moon
A) assured promise
B) extravagant promise
C) delaration
D) promise to love
E) None of these
- Who is Federico Ghizzoni?
A) vice-president of uniCredit
B) president of uniCredit
C) CEO of uniCredit
D) Ex-CEO of uniCredit
E) None of these
- What is the most appropriate synonym of “perk up”
A) cheerful
B) brisk
C) lively
D) hike
E) Both A & C
- Which of the following statement is false about Mr. Muister?
A) he is the chief executive of UniCredit
B) he expects exports to rise to 12.5%
C) he is making fake promises
D) he expects revenue to grow by 0.6% a year
E) None of these
- What is the meaning of “lapped it up” in the context?
A) to enjoy something
B) keen to get more of something
C) accept something
D) to believe too readilly
E) All of these
Write the Synonym of the following words: - unduly
A) aptly
B) appropriately
C) exorbitantly
D) legally
E) None of these
- dud
A) corker
B) wow
C) success
D) bust
E) None of these
Write the Antonym of the following: - perk up
A) cheerful
B) blue
C) buoyant
D) bright
E) None of these
- timid
A) coy
B) adventrous
C) bashful
D) mousy
E) None of these
all the best those who are having exam tomorrow:))
thanku az:)
reading ki jrurt nai sab vocab h:)
plz exam type dijiye and option a &b aise dijiye mam pls
thanx give on new pattern and also include time it will be helpful 5 min max for any RC
ty
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