British bank Lloyds sells Spanish retail activities

Britain's state-rescued Lloyds bank said on Monday that it has sold its loss-making Spanish retail banking activities to Spain's Banco Sabadell in a deal worth up to €100 million ($131 million).

LBG said in a statement that it would receive a 1.8-percent stake in Sabadell, worth about €84 million, plus an additional sum of up to €20 million over the next five years.

"Lloyds Banking Group plc is today announcing that it has agreed to sell its Spanish retail banking operations, including Lloyds Bank International S.A.U and Lloyds Investment España SGIIC S.A.U, to Banco Sabadell," the statement read.

"The sale comprises the group's retail and private banking business and the local investment management business in Spain."

Lloyds added that the sale of the business was expected to lead to a loss of approximately £250 million.

The business consists mostly of retail mortgages and deposits, with a large portion of non-resident clients.

However, LBG's Spanish corporate banking operations, which serve business clients, are not included in this transaction. They will carry on operating as normal.

Lloyds is 39-percent owned by the British government after a state bailout after the 2008 global financial crisis.

"The sale is in line with the group's strategy of rationalising its international presence and ensuring best value for shareholders," it added on Monday.

The deal remains subject to regulatory approval and is expected to complete this year.

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Spain’s Banco Popular to axe 3,000 jobs in cost cutting plan

Spain's struggling Banco Popular said on Tuesday that it plans to axe up to 3,000 jobs, about a fifth of its workforce, in the latest round of cost cutting by a Spanish lender.

Spain's Banco Popular to axe 3,000 jobs in cost cutting plan
The bank plans to close around 300 of its 2,000 branches in Spain as part of a restructuring plan. Photo: AFP

The bank plans to close around 300 of its 2,000 branches in Spain as part of a restructuring, it said in a statement.   

“This restructuring process will affect between 2,900 and 3,000 people,” the statement said.

The bank said it would negotiate the job cuts with unions.    

Banco Popular, Spain's seventh largest bank by market capitalisation, announced a cost-cutting plan in July, a month after raising €2.5 billion ($2.8 billion) in a share issue to clean up its balance sheet.

Like other Spanish lenders, it is making a major push to sell off real estate assets, including repossessed homes, which are clogging up its balance sheet and eating into earnings.

Banco Popular in July reported a second quarter net profit of just €122,000 and announced provisions on bad loans of €4.7 billion.

Spanish banks, which slimmed down after a decade-long property boom went bust in 2008, are once again closing branches and slashing jobs as their profitability is hit by stiff competition.

Santander, the eurozone's biggest bank by market capitalisation, plans to close 450 smaller branches and cut 1,400 jobs in Spain, about five percent of the staff in its home market, through voluntary departures.

Barcelona-based CaixaBank, Spain's third-largest bank, plans to cut 3,000 jobs, mainly through early retirement, as it seeks to trim its salary costs.    

Spain has the densest bank branch network in western Europe, with 8.6 branches per 10,000 residents, according to consultancy Roland Berger.  

The average in the entire European Union is five branches per 10,000 residents.