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Spain’s Sabadell bank looks to slash 1,900 jobs and close 250 branches

Spain's fifth-largest bank, Banco Sabadell, wants to cut 1,900 jobs and close 250 branches across the country as part of a cost-cutting plan, a union and the lender said Thursday.

Published: 3 September 2021 09:14 CEST

Spain's Sabadell bank looks to slash 1,900 jobs and close 250 branches

Banco Sabadell saw its net profit tumble in 2020 by 99.7 percent over previous year. Photo: Jose Jordán/AFP

The restructuring plan comes after the bank slashed 1,800 staff in Spain late last year, part of a wave of job cuts in the sector in recent years in the country.

Spain’s largest union Comisiones Obreras (CCOO) said it had warned that the proposed dismissals were “disproportionate, unreal and an insult to all staff.”

Proposing job cuts “without having previously looked for alternatives” is a sign of the little respect which the bank seems to have” for staff “who have been working and sacrificing for years to get the bank going”, it added in a statement.

Contacted by AFP, a source close to Banco Sabadell confirmed there were plans to reduce the workforce by “around” 1,900 people, mainly through voluntary departures.

European banks are struggling with low interest rates, the economic effects of the Covid-19 pandemic and the rise of online banking, which is forcing them to focus on cutting costs.

Banco Sabadell saw its net profit tumble in 2020 by 99.7 percent over previous year to €2.0 million ($2.4 million) due to hefty provisions to face up to the pandemic and the cost of its restructuring.

Adding to the pressure on Banco Sabadell, it tried to merge with larger Spanish rival BBVA in November but the two sides ended the talks after they failed to agree on price.

The proposed job reductions are part of a wave of restructuring in the Spanish banking sector since the 2008 global financial crisis,

Between 2008 and the end of 2019 Spanish banks slashed nearly 100,000 jobs, or around 37 percent of their workforce in 2008, according to the Bank of Spain.

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Card over cash? Why Germany is seeing a new payment preference

Germany has long been a very cash-based country, occasionally to the dismay of frustrated tourists at the Döner shop.

A few German phrases express the people’s love of physical money. There’s ‘only cash is true’ – Nur Bares ist Wahres. Or Bargeld lacht, literally meaning cash laughs, but used to imply that cash is what’s wanted, similar to ‘cash is king’ in English.

But the classic German preference for cash appears to be evolving, as the use of girocards is growing, even for small transactions.

How are girocards being used?

Girocard, an ATM and debit card service offered by German Banks, was designed to allow customers to use virtually all German ATMs and, increasingly, to make purchases at businesses.

READ ALSO: Ask an expert – Why is cash still so popular in Germany, and is it changing?

Last year, consumers in Germany used their Girocard more often than ever before for cashless payments. A total of €7.48 billion payment transactions with the plastic card were counted – 11.5 percent more than in the previous record year 2022, according to figures published by the Frankfurt-based institution Euro Card Systems.

Whether at the bakery, petrol station or supermarket, customers are increasingly pulling out their cards at the checkout, even for smaller amounts. As a result, the average amount paid with the Girocard fell from €42.34 to €40.69 within a year.

The rise of card payments in Germany

Contactless payment, which is possible with girocards and credit cards that have an NFC chip, got a boost during the Covid pandemic, as retailers promoted it for hygiene reasons.

But the use of card payments has continued to grow in Germany since then, boosted partly by the increasing use of girocards.

Promoting the use of girocards, some German banks have expanded their cards’ functions: Sparkassen, Volksbanken, or Raiffeisenbanken offer girocards for the digital wallet, for example.

Banks want to continue upgrading the payment card with further applications. For example, a project is being tested which would add an age verification function to girocards that would be useful when a customer is buying cigarettes.

On the retail side, it’s clear why the Girocard is preferred to other debit options.

“We see that debit cards from international providers cost up to four times more,” Ulrich Binnebößel, Head of the Payment Systems & Logistics Department at the German Retail Association (HDE) told DPA.

What’s the difference between the Girocard and other debit?

The Girocard is a strictly German phenomenon. It can be seen as the latest iteration of the EC card, which was created to consolidate payment systems following the unification of former East and West Germany.

In 1991 different debit card systems, including Eurocheque guarantee cards from former West Germany and Geldkarte ATMs from former East Germany, were unified into Eurocheque cards.

Then in 2001, the Eurocheque system was disbanded, but German banks continued to use the EC logo for “electronic cash’” cards, or EC cards. In 2007, the German Banking Industry Committee introduced Girocard as a common name for electronic cash and the German ATM network.

Girocards are only issued and accepted in Germany, so if you want to get one of your own, you’ll have to join a German bank, and shell out those notorious German banking fees.

READ ALSO: Why it’s almost impossible to find a free bank account in Germany

Alternatively, you can get by with internationally accepted debit cards provided by a bank in your home country, or otherwise by joining an app-based European banking service like N26.

But be warned, without the Girocard in hand, at some smaller retailers you may be told, “Leider nur Bargeld oder EC-Karte.”

With reporting by DPA

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