MADRID – CaixaBank plans to cut 8,291 jobs after the merger with Bankia. 1,532 branch closures are planned. The adjustment is above the expected 7,000 to 8,000 workers who would be laid off.
However, the number of layoffs is expected to fall in the coming weeks following negotiations between management and unions. This is the largest reorganisation ever carried out by a Spanish bank. And it concerns 16.1% of the 51,384 employees that CaixaBank and Bankia had jointly at the end of 2020. According to the proposal, the number of branches that will disappear accounts for 27% of the current branch network.
However, the bank justifies the measures, according to employee representatives in a number of areas. Such as on the basis of a drop in revenues, the slow recovery of credit, and the low-interest rates. The European Central Bank (ECB) has been trying for years to reactivate the eurozone economy.
In addition, the efficiency ratio (income-to-expense ratio) is high according to the unions. This is driving away stock market investors, and digitization is transforming the sector (less office use and main remote stations).
Voluntary redundancies where possible
The CEO, Gonzalo Gortázar assured that his entity will “pursue voluntary action wherever possible”. But that “meritocracy” will prevail in the future as it aims to “keep the best”. Last week, the unions warned they did not agree with this approach. Furthermore, they assured mobilisations and protests if the management, advised by specialist agency, Sagardoy, shows no flexibility in the negotiations.
The workers’ representatives have also warned that the workforce with early retirement age is “very well represented”. Therefore it would be useful to provide attractive terms for employees of any age to volunteer for. The group has 4,761 employees aged 55 or over, 1,524 aged 54, 1,410 aged 53, and 1,459 aged 52: 9,154 in total, of which 30% are in Madrid and 19% in Barcelona, where they are located in operational headquarters from the bank.
Mergers have the advantage for institutions of cutting costs and thus improving the profit and loss account. However, they are often difficult to execute. CaixaBank now has to negotiate with the unions about the amount that will enable the bank to realise the 770 million annual cost savings envisioned in the merger with Bankia by cutting thousands of jobs and closing hundreds of branches. Talks started last week by establishing the negotiating table. Furthermore, the bank aims to conclude matters before the end of the second quarter.
However, Gortázar has ensured the adjustment be done in one go instead of in two phases (first the central offices and then the rest of the branch network. As such, the integration of the technology platforms needed to initiate office closures is planned for late November/early December. Therefore, if this is the case, the majority of the redundancies could be made by the end of this year or the beginning of the next.
The adjustment further exacerbates the unstoppable job destruction of the last decade in the banking sector. Spanish financial institutions cut 94,016 jobs by 2019 with the end of the tail of the housing bubble since the historic peak of the workforce was reached in 2008. This is according to the latest official figures from the Bank of Spain. They ended that period with 176,839 employees, 34.7% less than at the start of the previous crisis and the eighth consecutive annual minimum since the measurements started.
There are no official figures for 2020, but the 12 largest banks in the country (Santander, BBVA, CaixaBank, Bankia, Sabadell, Bankinter, Unicaja, Liberbank, Abanca, Ibercaja, KutxaBank, and Cajamar, together accounting for 90% of employment in the sector in Spain) reduced their workforce by a further 2,988 employees last year.
However, with the layoffs underway an additional cut of more than 17,000 jobs is anticipated: Santander (3,572), Sabadell (1,800), and Ibercaja (750). To this can now also be added those of CaixaBank (8,291), BBVA (analysts predict 3,000, but the unions fear it will yield more), and the merger of Unicaja and Liberbank (between 1,000 and 2,000 are expected).