Italian lender Banca Monte dei Paschi di Siena (BMPS) on Tuesday said that as part of a turnaround business plan it would cut jobs, close branches and sell business units. The bank, which failed Europe's July stress tests, has said that it plans to cut 2600 full time employees which will help the lender reduce personnel expenses by 9% to €1.5bn (£1.34bn) in 2019 from €1.6bn in 2016.

With regards to branch closures, the Siena-based bank said it would reduce them to 1,500 over the next three years from the 2,000 it had in 2016. The network rationalisation, it said will help to decrease other administrative expenses by 4% to €710m in 2019 from €740m in 2016.

The oldest surviving bank in the world further said it would sell its bad-loans recovery unit and its merchant acquiring business activities. The lender added it had already received a €520m takeover offer for the latter from Istituto Centrale delle Banche Popolari Italiane, another Italian bank.

This is happening at a time when the bank is seeking investor support for its plan to raise fresh capital of €5bn and sell bad loans to the tune of €28bn. BMPS said it had called a shareholder meeting on 24 November where it would seek approval of this recapitalisation plan, which it intends to complete by the end of 2016.

The plan comes under new chief executive Marco Morelli, who has been in the lead role for just six weeks. In a statement, the bank said that the business plan is based on four main pillars. These include, unlock the full value embedded in its existing customer base, renew its operating model with a strong focus on efficiency, improve its asset quality and credit risk management and finally strengthen its liquidity and capital position.

One of the highlights in the plan was the relaunch of its commercial business. It said this is "based on the acceleration of the digitalization process and a higher focus on the Retail, Small Business and Affluent channels."

The plan also includes the full separation of its commercial divisions from the credit division. The former will also receive the support of new advanced analytics tools to assess the risk profile and to identify best product offering. This, the company said would improve credit risk management.

The bank concluded that upon the completion of the plan, it will be able to achieve a net income greater than €1.1bn. It added that it also expects return on tangible equity (ROTE) to exceed 11%, at the end of the plan.