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.

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Santander profits jump with economic recovery

The eurozone's biggest bank, Spain's Santander, said on Tuesday its first quarter net profit jumped 32 percent as strengthening economic recovery in its home market boosted revenue.

Santander profits jump with economic recovery
The entrance to Santander Bank's financial city in Madrid. Photo: Javier Soriano / AFP

The bank reported a net profit of €1.72 billion ($1.87 billion) in the first three months of the year, up from €1.3 billion during the same period last year.

Net profit in Spain — which posted its first full year of economic growth last year since the 2008 bursting of the property bubble — surged 42 percent in the first quarter to €357 million.

The bank said its bottom line in Spain was boosted by better lending income and fewer provisions against losses on bad loans.

Net loans in Spain were up 0.2 percent in the first three months of 2014 over the same period last year. Loans also increased slightly from the fourth quarter of last year.

The Spanish economy, the eurozone's fourth-largest, fell into a prolonged slump when the property bubble burst, leaving thousands of labourers out of work and creating an aftershock that claimed millions more jobs across the country.

But the economy is in the midst of an accelerating economic recovery due to a rise in private consumption and higher business investment.

Prime Minister Mariano Rajoy on Monday said the government expects the country's economy will expand by 2.9 percent this year, up from a previous estimate of 2.4 percent growth.

Spain's economy expanded by 1.4 percent in 2014.

Among Santander's main banking units, only Chile posted lower first quarter net profit, dropping 11 percent to €109 million.

In Britain, where Santander is one of the leading finance groups, profits rose 14 percent over the year to €477 million.

In key emerging market Brazil, profits rose by 41 percent to €516 million.