As part of a broad accord signed on Thursday with unions, UniCredit will also pay for 850 branch employees who would qualify for pension by the end of 2029 to opt to go into early retirement, being replaced by as many young hires.

The one-off bonus includes a 1,600 euro productivity premium for 2022, whose payment UniCredit has brought forward.

"This accord reflects the positive contribution of the Italian market to the group's good performance," UniCredit said.

UniCredit CEO Andrea Orcel, a former investment banker who arrived in April 2021, has pledged to refocus the bank's business on Italy, its biggest market which however had lost importance under previous CEO Jean Pierre Mustier.

The remaining 800 euros are a one-off payment facilitated by government measures exempting from taxation companies' payments to staff to help with the cost of living crisis.

UniCredit had announced similar measures in Germany whose government has also introduced an aid scheme to allow companies to pay tax free bonuses.

UniCredit said it would pay a bonus of 2,500 euros to its staff in Germany to help them cope with soaring prices.

UniCredit has 34,608 staff in Italy and 13,740 in Germany, according to its website. ($1 = 0.9502 euros)

(Reporting by Gianluca Semeraro and Valentina Za; editing by Federico Maccioni and Keith Weir)