SHARE
COPY LINK

FEATURE

New wave of layoffs in Spanish banking sector

In Spain where bank tellers were once legion, the sector is again reeling from thousands more job cuts as a 10-year trend gathers pace due to the ongoing pandemic.

Spanish banking layoffs
Photo: GABRIEL BOUYS / AFP

Two more big banks announced thousands of layoffs last week with 8,300 jobs to be axed at CaixaBank, or one in five of its staff, and 3,800 at its smaller rival BBVA, accounting for 16 percent of the workforce.

The announcements drew an angry response from Spain’s big unions, the UGT and the Workers’ Union (CCOO), who denounced the cuts as “brutal” and “scandalous”.

Late last year, Banco Santander, Spain’s largest bank, said it would cut 3,500 jobs while Banco Sabadell moved to lay off 1,800 staff.

All of them have made the same argument: that in a context of low-interest rates which is expected to continue, they have to cut costs by reducing the number of branches rendered unnecessary by the growth of online banking.

Online transactions at BBVA have grown by 87 percent over the past two years, while branch-based operations have fallen by 48 percent, the bank said on Thursday.

This bloodletting is not new in Spain: between 2008 and 2019, the sector shed around 100,000 staff – or nearly 40 percent of its employees – after narrowly escaping collapse during a financial crisis when banks only survived thanks to a massive public bailout.

Consolidation

As a wave of consolidation took hold, Spain’s huge network of smaller local banks, which fuelled a property bubble two decades ago by lending willy-nilly, were absorbed by bigger rivals who began slashing staff.

In the past decade, the number of bank branches were cut in half, a report by the Moody’s ratings agency found. “Over the past decade, the Spanish banking system has undergone one of the most profound consolidation processes in Europe,” it said.

Between 2008 and 2019, Spain had the highest number of branch closures and job cuts in Europe, with 48 percent of its branches shuttered compared with a bloc-wide average of 31 percent, and 37 percent of its staff laid off compared with 19 percent in Europe.

“In Spain, the two things we have a lot of are bars and bank branches… but it’s a model that is no longer profitable,” remarked Ricardo Zion, a banking expert at the EAE Business School.

With the explosion of online banking, “only older people go to branches, not the younger generation,” he said.

More layoffs at Spanish banks. Photo: JORGE GUERRERO / AFP

According to World Bank figures cited in the report, Spain had 105 bank branches per 100,000 residents in 2008, three times the European average. By 2019, that figure had dropped to 46, still double the European average.

“The employment restructuring process is not yet over,” nor is the consolidation, predicted Robert Tornabell, a banking specialist at the Esade business school.

To remain profitable, “banks must get bigger… and close branches that need a lot of staff but don’t justify the cost,” particularly in rural areas, he said.

The coronavirus pandemic has only aggravated the problem because in a sluggish economy, banks make less money and look elsewhere for profitability, Zion said.

In the case of CaixaBank, a merger with smaller rival Bankia that was finalised last month would entail the closure of many branches, some side-by-side on the same street, Tornabell said.

For staff, this new wave of layoffs was likely to be more traumatic than those in the past that largely involved people close to retirement. CaixaBank has warned that half of its 8,300 cuts would involve people under 50.

“It won’t be easy for these people to get back into the job market,” Zion warned.

Their fate has caused some concern within Spain’s Socialist-led government. “These are highly-educated people, meaning they are a human resource that needs to be protected as much as possible,” said Economy Minister Nadia Calvino.

“At the same time, I have expressed my concern about the high salaries and bonuses of senior managers within financial institutions” that are slashing jobs, she said.

READ ALSO: Spain’s BBVA bank poised to axe 3,800 jobs and close 530 branches 

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

FEATURE

Greenland foreign minister axed over independence remarks

Greenland's pro-independence foreign minister Pele Broberg was demoted on Monday after saying that only Inuits should vote in a referendum on whether the Arctic territory should break away from Denmark.

Greenland foreign minister axed over independence remarks
Greenland's pro-independence minister Pele Broberg (far R) with Prime Minister Mute Egede (2nd R), Danish foreign minister Jeppe Kofod and US Secretary of State Antony Blinken (2nd R) at a press briefing in Greenland in May 2021. Photo: Ólafur Steinar Rye Gestsson/Ritzau Scanpix

Prime Minister Mute Egede, who favours autonomy but not independence, said the ruling coalition had agreed to a reshuffle after a controversial interview by the minister of the autonomous Arctic territory.

Broberg was named business and trade minister and Egede will take on the foreign affairs portfolio.

The prime minister, who took power in April after a snap election, underscored that “all citizens in Greenland have equal rights” in a swipe at Broberg.

Broberg in an interview to Danish newspaper Berlingske said he wanted to reserve voting in any future referendum on independence to Inuits, who comprise more than 90 percent of Greenland’s 56,000 habitants.

“The idea is not to allow those who colonised the country to decide whether they can remain or not,” he had said.

In the same interview he said he was opposed to the term the “Community of the Kingdom” which officially designates Denmark, the Faroe Islands and Greenland, saying his country had “little to do” with Denmark.

Greenland was a Danish colony until 1953 and became a semi-autonomous territory in 1979.

The Arctic territory is still very dependent on Copenhagen’s subsidies of around 526 million euros ($638 million), accounting for about a third of its budget.

But its geostrategic location and massive mineral reserves have raised international interest in recent years, as evidenced by former US president Donald Trump’s swiftly rebuffed offer to buy it in 2019.

READ ALSO: US no longer wants to buy Greenland, Secretary of State confirms

Though Mute Egede won the election in April by campaigning against a controversial uranium mining project, Greenland plans to expand its economy by developing its fishing, mining and tourism sectors, as well as agriculture in the southern part of the island which is ice-free year-round.

READ ALSO: Danish, Swiss researchers discover world’s ‘northernmost’ island

SHOW COMMENTS