–CaixaBank reached agreement with unions on 6,452 voluntary departures
–The bank will cut around 14.5% of its workforce and close 1,500 branches, or around 29% of the network
–The plan will cost around 1.9 billion euros and will have a capital impact of 90 basis points, both to be accounted for in 2Q
By Pietro Lombardi
CaixaBank SA has reached an agreement with the unions on 6,452 redundancies, a key step in the integration of its Spanish counterpart Bankia.
The deal comes after months of negotiations – a period also marked by a few strikes – in which the number of employees affected by the restructuring fell by around 22%: the bank’s initial proposal was 8,291 cuts of posts.
The reductions agreed to represent around 14.5% of the bank’s workforce, the lender said on Thursday.
The move resolves the overlaps resulting from the merger with Bankia and helps the lender adjust to current market circumstances, he said. European banks have struggled with low interest rates hitting their profit margins for years, and the coronavirus pandemic has compounded those challenges. In such a context, a potential consolidation appears more and more as part of a solution to an overcrowded banking landscape.
CaixaBank’s exits will be voluntary, the bank and Spanish union Comisiones Obreras said. This was a key demand for the union, said Comisiones Obreras.
About three quarters of the reductions will concern CaixaBank’s commercial network, with companies and other structures representing the remaining quarter. 1,500 branches must be closed, or about 29% of the network, against 1,534 in the bank’s first proposal.
The agreement also includes other measures, such as a relocation plan offered to all employees leaving the bank.
The plan will cost around 1.9 billion euros ($ 2.25 billion), while the impact on capital is expected to be 90 basis points. Both will be booked in the second quarter. CaixaBank said the deal will help the bank achieve at least € 770 million in cost synergies.
“Despite the end point in terms of releases is lower than previously released figures […] we believe the deal puts CaixaBank on track to realize the synergies mentioned above at a cost that remains well below early retirement plans managed by the bank in the past, ”said Jefferies.
The labor agreement addresses one of the key issues arising from the Bankia acquisition, which the bank finalized in March. The merger created Spain’s largest national bank.
Write to Pietro Lombardi at [email protected]; @ pietrolombard10