Spanish banks to cut jobs for €35bn from EU

City A.M. Reporter
European authorities will transfer €35bn (£28.3bn) to Spain’s state bank rescue fund on December 15 in exchange for massive layoffs at Spain’s four nationalised banks, including state-rescued Bankia, El Pais newspaper reported yesterday.

The cash injection from European bailout funds will be disbursed to troubled Spanish banks two weeks after it is paid into Spain’s bank restructuring fund, the paper said.

Bankia, which sought a €23.5bn bailout from the state in May, is expected to be forced to lay off up to 6,000 people from its current 20,000 staff, while NovaGalicia Bank is seen laying off 2,000 of its 5,800 workforce, said El Pais, citing European and banking sources. The report also said the two banks would have to close 1,000 branches.

Catalunya Caixa (CX) and Banco de Valencia, the other two nationalised lenders, are currently being sold off, and conditions would be imposed on the buyers, the paper said.

The payment will be the first since the Spanish government was granted up to €100bn of aid in June, in a European bail-out of the banking sector. It needs the money to clean up the balance sheet of financial institutions hit by the burst of a real estate bubble five years ago, which left them loaded with €184bn in toxic property assets.