Spanish banks close branches and cut jobs

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Spanish banks are closing branches and cutting jobs.

BRANCHES are closing and jobs are being slashed by Spanish banks as profitability is hit by stiff competition.

The three biggest lenders in the country, Santander, BBVA and CaixaBank, all posted dwindling first quarter net profits, especially in Spain, which is fighting a jobless rate of 21 per cent.

The Eurozone’s biggest bank by market capitalisation, Santander, plans to close 450 smaller branches and cut 1,400 jobs in Spain. This equates to about 5 per cent of jobs in its home market, through voluntary departures.

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The bank has forecast that this move will save between €75 and €110 million every year from 2017.

Whilst Spain’s third-largest bank, Barcelona-based CaixaBank plans to cut 500 of its 32,500 jobs in the country and will be looking to achieve this through early retirement plans.

Ignacio Soto of the UGT union, said: “We fear that the job cuts in the banking sector have not ended.”

Currently Spain has the highest number of bank branches per resident in Western Europe, with 8.6 branches per 10,000 residents, according to Roland Berger, a consultancy firm. Spain’s number which is vastly higher than the average in the EU which is five per 10,000 residents.

In 2008 the Spanish economy underwent a drastic restructuring after the dramatic collapse of a decade long property bubble in 2008.

The predicament led Spain to take a €41.3 billion loan from the EU with the aim of restructuring its banks, which were burdened with property and loans whose value had nose-dived.

According to the Bank of Spain, between 2008 and 2015 the sector ditched 75,000 of its roughly 278,000 jobs, and more than 13,000 branches closed their doors.

Strained and small regional savings banks merged with larger banks or were bought by Spain’s large lenders.

Banks started to perform better in 2014 as demand for loans increased, although lenders were hesitant to get involved with the troubled real estate sector.

Although the rate of bad debt in Spanish banks is reducing, the rate is still 10 times higher than the average in the EU.

Households have been spending more but are still cautious of taking out too many loans and banks have therefore started a price war to attract customers, which reduces their margins.

Spanish lenders profitability has also been dented with the European Central Bank’s cut to interest rates as it leads to lower payment on loans for consumers and businesses.

“Bank customers will have to get used to paying for services which up until now have been free,” said the head of the Spanish Banking Association, Jose Maria Roldan.

There has been a recent shift to online and mobile banking, especially by younger customers.

The Roland Berger consultancy expects that “the trend of branch closures and reduction of staff will continue.”

One think tank, Funcas, expects that the banking sector could close up to 3,000 branches by 2019, and cut around 15,000 jobs to end up with around 180,000 positions.

Spain’s governor for banks Luis Maria Linde is calling for a new set of mergers, meaning in the coming years the banks could group together and undergo considerable change as they streamline their processes. 

2 COMMENTS

  1. I am not surprised we tried to open a 123 bank account Santander but was told that we had to close our account which we have now and put everything with them. We said that was not what we wanted but they said they were not interesed in us just having a 123 account they wanted all our money plus our pension to be paid in. If these people just had a bit of forsight they would have money off lots of people. Look after the pennies and the pounds look after themselves

  2. I understand where you are coming from with banks in Spain but the Santander 123 account works where they pay money into your account every month… but you need to pay a fixed payment into the account such as pension or wage, then if you use your CC 3 times you get more payments. If you don’t do that then it will cost you money to have the account so I just want to make sure you understand where they might have been coming from as you might have got someone who maybe didn’t understand enough English to explain it right.

    I have an account with Santander and a member of my family has one with another banking group, I handle the banking side for them as they are not always here and its a pain having to deal with two banks so I asked Santander what they needed from a family member for them to change the bank account from their current bank to Santander, they wanted a certificate to prove their earnings, I said the person was a housewife and they said they need a certificate to prove that she is a housewife! I decided to tell here to leave the account where it was lol

    On the other side, banking doesn’t seem to be much better in the UK either 😉 I have been with my UK bank for 45 years. For the first time every 4 years ago they asked me to prove my identity with copy of my passport and electric bill, I did and they then they asked me again 2 years later. I explained I have had an account with them for 45 years since I was 14 but still insisted I had to confirm my identity 😉

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