SPAIN’S largest bank Santander announced yesterday that it will spend around €260m (£211m) to absorb subsidiary Banesto and will close 700 local branches as it tries to cut longer-term costs.
Spain’s banks, hit by a slump in the property market and a prolonged recession, are trying to rid themselves of around €185bn of real estate assets.
Santander said the move would generate savings of €520m for the group by the third year of the merger, of which €100m are expected from revenue increases.
Santander, Banesto and unlisted private banking division Banif, which will also be absorbed in the merger, have around 4,664 offices in total. The group’s combined market share of branches in Spain would increase from 10 per cent in 2008 to 13 per cent in 2015, as its branch cuts would be less than the decline across the sector as a whole.
At the end of 2015, Spain will have an estimated 30,000 bank branches, down by 16,000 or 35 per cent in eight years.
The move will have a neutral effect on Santander’s capital ratios, Santander said.