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TOLLS

Will driving in Spain soon be dominated by paying motorway tolls?

Spain is known by its European neighbours as being almost a ‘toll-free paradise’, but pressure from Brussels could mean this uncostly road utopia soon comes to an end. 

Will driving in Spain soon be dominated by paying motorway tolls?
Photo: Jimmy Baikovicius/Flickr

What is the latest?

Spain has conceded to pressure from the EU to introduce more tolls on its roads.

The Spanish government has already drafted a project to present in Brussels in which it describes how it will introduce a toll system across its network of motorways and high-capacity roads to cover their huge maintenance costs. 

This is in stark contrast to the trend in recent years where there’s been a ‘liberation’ of tolls, contributing to making Spain one of the cheapest countries in Europe in terms of road tolls. 

Why the change in stance?

Even though the evidence would suggest otherwise, Spain’s national government has wanted to introduce toll systems similar to those of its EU neighbours for a couple of years now. 

As things stand, Spain is one of the countries in Europe where drivers pay the least for the use of its high-capacity road network, spending 76 percent less on tolls than the average for EU countries.

This lack of funding for maintenance has caused a deficit of €8 billion for the Spanish government which it is now looking to address, however unpopular the measure.

Why now in the middle of a pandemic when Spaniards are having to tighten their belts more than ever? Well, with €140 billion in EU rescue funds recently allocated to Spain, Pedro Sánchez’s administration is no doubt feeling the pressure to keep Brussels happy.

Photo: Luis Gené/AFP

What does the plan consist of?

Spain’s ‘Recovery, Transformation and Resilience Plan’, which covers other modernisation goals other than tolls, “will review the financing of high-capacity roads and establish a payment system that guarantees the necessary funds for the conservation of Spain’s state road network”, without revealing more details for the moment.

According to Spanish construction employers’ association APCE, the introduction of tolls on the country’s toll-free network (14,100 kilometres) would generate €12.6 billion a year that can be fed back into public coffers.

There are also reports suggesting that one of the aims will be to reduce territorial imbalances, since there are some Spanish regions where tolls are more common than in others.

When will they start charging more tolls?

Spain’s Ministry of Transport, Mobility and Urban Planning has announced that the current ‘liberation’ of tolls on Spanish motorways will continue as planned in 2021, indicating that for this year at least many motorways in Spain will continue or become toll-free.

READ MORE: The Spanish motorway routes that will become toll-free in 2021

This has occured because several private companies handling motorway toll payments in Spain have seen some of their concessions expire, meaning that a handful of highway sections no longer require drivers to pay tolls.

How toll-free is Spain?

Currently, driving the 1,200km that separates Paris from Madrid costs €91 in tolls, €72 of which are paid in France and €19 in Spain. 

Spain is one of the EU countries with the fewest high-capacity toll roads – less than 20 percent of the total – despite having one of Europe’s most extensive networks (17,000 kilometres). 

A lack of funding has reportedly resulted in it also being one of the worst maintained

Cyprus, Estonia, Iceland, Liechtenstein, Malta and Montenegro are the only European countries without tolls. 

Most EU countries have various formulas to raise money from drivers and thus contribute to the maintenance and growth of road infrastructures. 

They go from physical tolls with barriers, such as those installed on different motorways in Spain, to electronic tolls in Portugal and a sticker system for vehicles where toll rates are determined by how polluting the car is, which currently exists in Austria and Switzerland.

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MONEY

Rampant branch closures and job cuts help Spain’s banks post huge earnings

Spain’s biggest banks this week reported huge profits in 2021 and cheered their return to recovery post-Covid, but ruthless cost-cutting in the form of thousands of layoffs, hundreds of branch closures and the removal of many ATMs have left customers in Spain suffering, in this latest example of ‘Capitalismo 2.0’. 

A man withdraws cash from a Santander branch in Madrid.
More than 3,500 Santander workers lost their jobs in Spain in 2021 and a further 2,000 more employees working for Santander across Europe were also laid off. Photo: PHILIPPE DESMAZES / AFP

Spanish banking giant Santander on Wednesday said it has bounced back from the pandemic as it returned to profit last year, beating analyst expectations and exceeding its pre-COVID earnings.

Likewise, Spain’s second-largest bank BBVA said on Thursday that it saw a strong rebound in 2021 following the Covid crisis, tripling its net profits thanks to a recovery in business activity.

It’s a similar story for Unicaja (€137 million profit in 2021), Caixabank (€5.2 billion profit thanks to merge with Bankia), Sabadell (€530 million profit last year), Abanca (€323 million profit) and all of Spain’s other main banks.

This may be promising news for Spain’s banking sector, but their profits have come at a cost for many of their employees and customers. 

In 2021, 19,000 bank employees lost their jobs, almost all through state-approved ERE layoffs, meant for companies struggling financially.

BBVA employees protest against layoffs in May 2021 in Madrid. Spain’s second-largest bank BBVA is looking to shed 3,800 jobs, affecting 16 percent of its staff, in a move denounced by unions as “scandalous”. (Photo by GABRIEL BOUYS / AFP)

Around 11 percent of bank branches in Spain have also been closed down in 2021 as part of Spanish banks’ attempts to cut costs, even though they’ve agreed to pay just under €5 billion in compensation.

Rampant branch closures have in turn resulted in 2,200 ATMs being removed since the Covid-19 pandemic began, even though the use of cajeros automáticos went up by 20 percent in 2021.

There are now 48,300 ATMs in Spain, levels not seen since 2001.

READ MORE:

Apart from losses caused by the coronavirus crisis, Spain’s financial institutions have justified the lay-offs, branch closures and ATM removals under the premise that there was already a shift to online banking taking place among customers. 

But the problem has been around for longer in a country with stark population differences between the cities and so-called ‘Empty Spain’, with rural communities and elderly people bearing the brunt of it. 

 

Caixabank laid off almost 6,500 workers in the first sixth months of 2021. Photo: ANDER GILLENEA/AFP

Just this month, a 78-year-old Valencian man has than collected 400,000+ signatures in an online petition calling for Spanish banks to offer face-to-face customer service that’s “humane” to elderly people, spurring the Bank of Spain and even Spain’s Prime Minister Pedro Sánchez to publicly say they would address the problem.

READ MORE: ‘I’m old, not stupid’ – How one Spanish senior is demanding face-to-face bank service

It’s worth noting that between 2008 and 2019, Spain had the highest number of branch closures and bank job cuts in Europe, with 48 percent of its branches shuttered compared with a bloc-wide average of 31 percent.

Below is more detailed information on how Santander and BBVA, Spain’s two biggest banks, have reported their huge profits in 2021.

Santander

Driven by a strong performance in the United States and Britain, the bank booked a net profit of €8.1 billion in 2021, close to a 12-year high. 

It was a huge improvement from 2020 when the pandemic hit and the bank suffered a net loss of €8.7 billion after it was forced to write down the value of several of its branches, particularly in the UK. It was also higher than 2019, when the bank posted a net profit of €6.5 billion.

Analysts from FactSet were expecting profits of €7.9 billion. 

“Our 2021 results demonstrate once again the value of our scale and presence across both developed and developing markets, with attributable profit 25 per cent higher than pre-COVID levels in 2019,” said chief executive Ana Botin in a statement.

Net banking income, the equivalent to turnover, also increased, reaching €33.4 billion, compared to €31.9 billion in 2020. This dynamic was made possible by a strong increase in customer numbers, with the group now counting almost 153 million customers worldwide. 

“We have added five million new customers in the last 12 months alone,” said Botin.

Santander performed particularly well in Europe and North America, with profits doubling in constant euros compared to 2020. In the UK, where Santander has a strong presence, current profit even “quadrupled” over the same period to €1.6 billion.

Last year’s net loss was the first in Banco Santander’s history, after having to revise downwards the value of several of its subsidiaries, notably in the UK, because of COVID.

The banking giant, which cut nearly 3,500 jobs at the end of 2020, in September announced an interim shareholder payout of €1.7 billion for its 2021 results. “In the coming weeks, we will announce additional compensation linked to the 2021 results,” it said.

BBVA

The group, which mainly operates in Spain but also in Latin America, Mexico and Turkey, posted profits of €4.65 billion ($5.25 billion), up from €1.3 billion a year earlier.

The result, which followed a solid fourth quarter with profits of €1.34 billion, was higher than expected, with FactSet analysts expecting a figure of €4.32 billion .

Excluding non-recurring items, such as the outcome of a restructuring plan launched last year, it generated profits of 5.07 billion euros in what was the highest figure “in 10 years”, the bank said in a statement.

In 2020, the Spanish bank saw its net profit tumble 63 percent as a result of asset depreciation and provisions taken against an increase in bad loans due to the economic fallout of the virus crisis.

“The economic recovery over the past year has brought with it a marked upturn in banking activity, mainly in the loan portfolio,” the bank explained, pointing to a reduction of the provisions put in place because of Covid.

In 2021, BBVA added a “record” 8.7 million new customers, largely due to the growth of its online activities. It now has 81.7 million customers worldwide.

The group’s net interest margins also rose 6.1 percent year-on-year to €14.7 billion, said the bank, which is undergoing a cost-cutting drive.

So far, it has axed 2,935 jobs and closed down 480 branches as the banking sector undergoes increasing digitalisation and fewer and fewer transactions are carried out over the counter.

At the end of 2020, BBVA sold its US unit to PNC Financial Services for nearly 10 billion euros and decided to reinvest some of the funds in the Turkish market.

In November, it launched a bid to take full control of its Turkish lending subsidiary Garanti, offering €2.25 billion ($2.6 billion) to buy the 50.15 percent stake it does not yet own.

The deal should be finalised in the first quarter of 2022.

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