Spanish lender CaixaBank, which recently acquired Bankia, is laying off 8,291 employees in one of the biggest downsizing exercise in the country’s history.

The retrenchment will bring down the bank’s workforce by 18.7% to 36,109 from 44,000.

The group also plans to shutter 1,534 branches, or 27% of its branches, in response to the digital shift by customers.

At present, the Spanish lender is negotiating with union bosses over its plan.

Regarding the retrenchment plan, CaixaBank said: “This process is based on production and organisational grounds, given the overlaps and synergies derived from the merger and the current market circumstances.”

CaixaBank’s management intends to give preference to voluntary redundancies. It said that the voluntary departures should not exceed 50% of employees over 50 years of age.

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It also plans to factor in performance for making the cuts.

The bank also committed to “an outplacement and support plan for all affected people, to facilitate their incorporation into and adaptation to a new job position, which will be absolutely differential and more details of which will be provided in future meetings”.

The culling by CaixaBank marks the third-largest round of layoffs by a Spanish business, after telecommunications firm Telefónica and automobile manufacturer Seat.

The move comes shortly after CaixaBank’s merger with Bankia, which led to the formation of a $787bn (€664bn) entity with 20 million customers.

The Spanish state’s 62% stake in Bankia dropped to 16% following the transaction. The bank was partly nationalised in 2012 in a €22.4bn bailout.

Earlier this year, it was reported that Spanish banking group BBVA is planning to axe around 3,000 employees, or 10% of its total staff, as more customers shift to digital banking platforms.

Spanish banking group Santander too has announced job cuts recently.