Within a month of completing its takeover of Bankia, Spain's CaixaBank said Tuesday it would shed nearly one in five jobs in the latest cuts to hit the banking sector.
CaixaBank confirmed the move would affect 8,291 staff following the mega-merger with Bankia to form Spain's largest domestic lender by assets.
The cutbacks were necessary as a result of the "overlaps and synergies derived from the merger and the current market circumstances," it said in a statement.
The move comes as the sector struggles with very low interest rates, the economic crisis caused by the pandemic and a surge in popularity of online banking services.
The planned job losses, which have yet to be negotiated with the unions, represent 16 percent of CaixaBank's total workforce of 51,000, the UGT union said.
The bank also intends to shut 1,534 branches, accounting for 27 percent of its locations in Spain, unions said.
Last month, CaixaBank's CEO Gonzalo Gortazar said he wanted to implement cuts that would not be "traumatic" and that would be voluntary.
The bank's statement said it would give preference to voluntary departures, while stressing that should not include more than 50 percent of staff over the age of 50.
- 'Could have been worse' -
Completed at the end of March, the merger has transformed the landscape of Spanish banking with the new entity retaining the CaixaBank name and holding 25 percent of the domestic market.
The deal created Spain's largest bank with combined assets of 664 billion euros ($787 billion) and 20 million customers in the domestic market, putting it ahead of Santander and BBVA, both of which have a more international presence.
The Spanish state was the largest shareholder in Bankia, but following the deal, its 62-percent stake dropped to 16-percent in the new group.
Government spokeswoman Maria Jesus Montero said the losses could have been far higher.
"If the merger had not taken place, it could have been a lot worse," she said.
"Although the numbers are certainly high, they would have been much higher if each bank had conducted its own restructuring."
The government had encouraged the merger in the hope of increasing Bankia's profitability in order to recover some of the money it invested to rescue the bank in 2012 with a huge 22-billion-euro aid package.
The huge merger comes in a very difficult context for Spain which saw the economy contract 10.8 percent in 2020, one of the worst performers in the eurozone.
Banks in Spain lost 6.9 billion euros in 2020 after forking out 12 billion euros to cover the increased risk of the non-repayment of loans, according to a report published on Tuesday by AEB, the Spanish Banking Association.
Since the financial crisis of 2008, Spain's banks have reportedly shed nearly 100,000 staff.
Late last year, Spanish banking giant Santander said it would slash nearly 3,600 jobs while Banco Sabadell plans to cut 1,800 as part of major restructuring.