BBVA to weigh thousands of job cuts to reduce costs

BLOOMBERG

Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest bank, is weighing a fresh round of job cuts across the company to lower costs, three people with knowledge of the matter said.
The bank may eliminate 2,000 positions or more, said the people, asking not to be identified because the matter is private. The cuts would mostly affect branches and the lender’s central services unit, as well as the investment banking business, though a final decision hasn’t been made, two of the people said.
Spanish lenders have been seeking ways to shore up profitability, battered by record-low interest rates, tougher financial regulation and weak demand for credit. BBVA said it was cutting about 1,100 jobs after integrating CatalunyaCaixa. Since taking over the helm of BBVA in May 2015, Carlos Torres Vila has seen the shares lose about 42 percent of their value.
“It makes sense for lenders to look at how they can reduce costs since the use of new technology is forcing Spanish banks to change their business model,” said Daragh Quinn, an analyst at Keefe Bruyette & Woods with an outperform recommendation on the shares. “If BBVA’s plans are confirmed, it would be something expected as they haven’t done any large job reduction before.”
The shares rose 0.2 percent to 5.26 euros at 4:34 p.m. in Madrid. They have dropped about 22 percent this year, while Banco Santander SA declined 15 percent.
Other Spanish banks are also looking at ways to lower costs. Santander, Spain’s largest bank, is closing branches in its home market and is cutting about 1,400 jobs in Spain. While Banco Popular Espanol SA is also planning to reduce staff, no decision on the scale of cuts has been taken, a spokesman for the bank said. Expansion newspaper reported that the lender may eliminate as many as 3,000 jobs. “Efficiency is a top management priority and BBVA is constantly seeking ways to improve it,” a bank spokesman said. “As of now BBVA has one plan that includes a sizable workforce reduction,” related to the integration of CatalunyaCaixa which BBVA bought in 2014.
BBVA employed 137,445 people at the end of March, according to the website. Torres has signaled the bank may cut its branch network in Spain.