BBVA layoffs are just the start for European banks

People are protesting plans by BBVA, the country’s second largest bank, to cut back its banking staff in its domestic market in Madrid, Spain on June 2, 2021. The sign on the t-shirt reads “No to the ERE (workforce adjustment plan) in BBVA “.

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LONDON, June 9 (Reuters Breakingviews) – BBVA (BBVA.MC) has launched what is expected to be a wave of post-pandemic layoffs at European banks. Late Tuesday, the Spanish lender led by Carlos Torres Okay to lay off 2,935 employees, one tenth of its national workforce. This is the first such contraction that BBVA has achieved without a merger and acquisition agreement in recent history. The projected savings of 250 million euros, taxed at 28%, should raise the forecast net income for 2022 by 5.5% to around 3.5 billion euros.

Although layoffs will cost BBVA an average of 245,000 euros per employee, other lenders will surely follow suit. Iberian peer Caixabank (CABK.MC) is in negotiations to lay off nearly a fifth of workers following a merger with Bankia. And HSBC (HSBA.L), cautiously relaunched a pre-pandemic plan to cut around 35,000 jobs. BBVA’s 55% cost / income ratio in Spain last year was already better than the EU average of 65%. As lowest interest rates slash income, EU bank bosses will sharpen their knives. (By Christophe Thompson)

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