Unicredit shares rally 9%, but fundamentally, things are not looking good for Italy or EU banks

Just today, it has been announced that Italy's biggest bank Unicredit, whose shares had more than halved in value this year over a weaker balance sheet than major European rivals, has set out plans to cut thousands of jobs and try to find a way to raise €13bn (£10.9bn) from investors, (instead of a possible bank bail in) to boost its ailing balance sheet.

The markets had otherwise been distracted by Deutsche Bank and its rival Monte dei Paschi, but this is now the latest Italian lender to come back up to the surface that needs to take drastic action on the back of hundreds of billions of euros of bad loans. (Monte dei Paschi di Siena is going ahead with its plans for a private sector rescue designed to raise €5bn (£4.2bn) and avoid a government bail-out).

Unicredit's latest proposal will see it axe an additional 6,500 workers over the next three years, adding to previously-announced cuts to take the total to 14,000, or 11% of its workforce. It will also shut around a quarter of its branches. The jobs cuts aim to save €1.1bn a year while Unicredit's cash call on investors will take place in the first three months of 2017 as it seeks to remove nearly €18bn (£15bn) of bad debt. Shares in the bank are now 9% higher on the news as markets liked the plan as an alternative to bail-outs or even worse, bail ins. However, the concerns are if the bank is unable to raise the cash next year and how the rest of the banking sector will weather the pending storms in the European banking climate.

Chief executive Jean Pierre Mustier said the group was taking "decisive actions" to offload its bad debts and "improve and support recurring future profitability".