The considered high salaries of Spanish bank executives and the staff and office adjustment processes undertaken by a large part of Spanish banks have once again focused attention on the sector. The pressure from the unions, which, as in Fuenteovejuna, have united in one voice to try to reduce the employment regulation files (ERE) now launched by BBVA and CaixaBank, have further contributed to expanding the echo of these massive dismissal processes.
CaixaBank and BBVA negotiate layoffs; Santander and Sabadell, which have just closed each ERE, plan more
Their voices, in fact, have managed to reduce the workforce cut by 850 jobs, to now place the exit plans at around 11,250 employees (7,800 at CaixaBank after reducing the number of departures by 500, and 3,448 at BBVA, after cutting the figure 350 departures), a number still considered by union representatives as very high and “shameful”.
But despite pressure from the unions, all banks have repeated in their respective presentations of first quarter results that “it is inevitable to tackle these adjustment processes, even if they are painful.” The changes in the habits of the clients and the still, and it seems that for several more years, negative interest rates put pressure on the profitability of these entities, which cannot cover their capital costs. “And if a business is not profitable, either you transform it and make it make a profit or you close it,” explained a well-known banker on Thursday.
The CEO of BBVA, Onur Genç, explained something similar in the presentation of results for the first quarter. He highlighted that the Spanish banking sector does not cover its cost of capital, which is in the double digits compared to a single digit ROE. “We do not have a double digit ROE and that is the problem we are facing. If you don’t have double-digit ROE, you don’t attract capital and you can’t boost the economy, which is what the bank’s mission should be, ”he argued.
The BBVA executive provided another devastating piece of information for the workforce and for the current banking model with a large number of branches (although less and less). Branch transactions have fallen 50% in the last two years. “In two years a part of the business has been cut in half, that is something that requires a reaction and that is what we are doing with these efficiency plans,” he claimed.
But this transformation is not exclusive to BBVA. Santander also recognizes that 50% of the sales carried out by the group are already made digitally, compared to 41% the previous year. In the case of Sabadell, 45% of loan sales in the first quarter have been digital, 44% of documents have been signed remotely and 94% of the main service operations are carried out digitally.
In these weeks the unions negotiate the EREs of BBVA and CaixaBank. Santander has just made another adjustment, the same as Sabadell. Ibercaja is on it. And soon Unicaja will announce its workforce adjustment after its merger with Liberbank, which is only awaiting the relevant authorizations. But both the bank chaired by Ana Botín and the one headed by César González-Bueno rule out new restructuring processes in the coming months.
Santander, in fact, has just implemented adjustments in the United Kingdom and Portugal, but its CEO, José Antonio Álvarez, already explained on Wednesday at the press conference on the results corresponding to the first quarter that at the bank “we are in a transformation process (…). Now we have a model where transactionality in branches has fallen sharply and continues to shift towards the digital model and ATMs, and it is a growing trend.
All bankers repeat the same message: “Our salaries are the most regulated in Europe”
With these statements, the bank implies that the adjustments have not been completed because customers no longer go to the office and expenses must be cut. The new ERE of Santander in Spain is expected to be undertaken next year, although at the moment it is speculation.
What is not speculation is Sabadell’s intention to undertake another process of collective redundancies. Last year when he announced the adjustment that has just ended, with the departure of 1,800 employees, there was already talk of a second for this year, and, despite the fact that the group has changed its leadership, this plan is maintained. As González-Bueno explained on Friday in the presentation of results for the quarter, Sabadell needs to further cut its expenses. The bank’s efficiency ratio is one of the highest in the sector (the higher the worse). It is 54.6%. “Costs are a structural problem in the sector, because there is a change in consumer habits that no one is missing,” he declared. And the numbers are cast.