Banco Sabadell is seeking to cut 1,900 jobs in Spain, around 13% of staff in its home market, a trade union negotiating with the bank said this week, under plans to cut costs and make more money.
Such a reduction would be Sabadell’s second in less than a year, after recently cutting 1,817 jobs in Spain, where it employs a total of 14,648 people.
Union Comisiones Obreras (CCOO) said it saw no reason for a new round of layoffs at Sabadell, given ‘no economic, technical, productive or organisational causes’.
Banks across Europe are struggling to cope with record low interest rates, and the economic downturn sparked by the Covid-19 pandemic has forced them to focus on further cost cuts. They are also trying to adapt to a customer shift towards online banking.
Based on the outcome of previous negotiations, the actual number of job cuts at Banco Sabadell could ultimately be lower. In May, the bank said it expected additional cost savings and revenue growth from a push towards corporate and consumer lending in Spain to buoy profitability as part of its new three-year strategic plan.
The bank’s return on equity (ROE), a measure of a bank’s profitability, was 3.10% at the end of June compared to a current estimated cost of capital of above 9%.
The bank’s failure to merge with bigger rival BBVA in November added pressure to pursue a more aggressive cost-cutting strategy as investors worried about its ability to handle an expected rise in bad loans alone.
Sabadell’s chief financial officer Leopoldo Alvear said in July the bank expected to announce in the third quarter more details on costs and synergies of its new restructuring process in Spain.
Staff at Spanish banks have recently been holding protests against layoff plans. BBVA and CaixaBank recently agreed with unions to cut 2,935 and 6,452 employees, respectively. Caixiabank bought Bankia for 4.3 billion euros in September 2020.