MADRID – The board of CaixaBank announced on Tuesday that it will carry out a large-scale round of layoffs that will put no less than 8,291 of the employees on the street. That’s nearly 19% of the bank’s entire workforce.
The reorganisation is the result of the merger with Bankia, which also makes it possible to close 1,534 of 5,639 bank branches. This is the first proposal the bank is putting on the table. And as such, will require to be negotiated with the social partners in the coming weeks. In any case, it will be the largest personnel reorganisation ever carried out by a bank in Spain.
In absolute numbers, most CaixaBank employees could lose their jobs in the Madrid region, followed by Barcelona and Valencia. For employees who remain in service, the bank intends to scrap the extra allowances that are paid out. These include payments made in the event of the death of a family member, the birth of a child or the special allowances for 25 to 35 year olds.
Sales decline, low interest rates and slow credit recovery
The management has announced the mass layoff is as a result of a major fall in sales and the slow credit recovery. Also it is due to the low interest rates with which the European Central Bank (ECB) is trying to stimulate the eurozone economy. In addition, the relatively high cost to income would keep investors away from the stock market. Furthermore, the closure of the offices is mainly the result of the ongoing digitization of the entire financial sector.
Government spokesperson and finance minister María Jesús Montero calls the reorganisation of CaixaBank “very bad news.” CaixaBank is 16.1% owned by the Spanish government. “It is regrettable if definitive redundancies are made while the government makes great efforts preserving as many jobs as possible. Especially with temporary unemployment schemes (ERTE),” said the minister.
Unions are angry
The Spanish trade unions have responded strongly to CaixaBank’s reorganisation proposal. The UGT trade union, for example, calls the plan “uncivilised and scandalous”. It also accuses the management of unfairly treating the workers’ for the merger and the pandemic. According to the trade union, these are put on the street with an inhumane and miserable severance scheme.
If CaixaBank can ultimately implement the proposed reorganisation, this will mean annual savings of €770million. The bank wants to finish negotiations with the social partners before the end of the second quarter. If that succeeds, most of the redundancies will happen at the end of this year and early next year. Also, it is expected more than 1,500 bank branches will close by the end of November or beginning of December.
Long-term crisis in the financial sector
Spain’s twelve largest banks (Santander, BBVA, CaixaBank, Bankia, Sabadell, Bankinter, Unicaja, Liberbank, Abanca, Ibercaja, KutxaBank and Cajamar), account for 90% of employment in the financial sector. Together, they saw a loss of 2,988 employees in 2020. This means that a total of 97,000 people lost their jobs since the start of the previous economic crisis in 2008. To this must be added the imminent reorganisation of CaixaBank with 8,291 redundancies, the proposed redundancies of 3,572 Santander employees. Also that of 3,000 BBVA employees, 1,800 employees of Sabadell and 750 employees of Ibercaja. The merger of Unicaja and Liberbank is expected to cost another 1000-2000 employees.