Spain’s fifth-biggest lender is preparing to eliminate 235 branches in the country, to trim costs and focus on its efforts to sell services on digital platforms.
As it braces for the branch closures, Sabadell is also contemplating investments in ATMs and bigger branches in 2020.
As of late last year, Sabadell had 1,893 branches mostly in Spain, meaning the upcoming closures would imply almost a 13% reduction in offices.
For the moment, however, the bank plans to maintain its current headcount of 16,668 staff in Spain, choosing instead to reallocate employees to other functions, especially in the digital operations.
Reeling from covid-19
Like other European banks, Spanish lenders were struggling to lift earnings well before covid-19, as low interest rates squeezed financial markets.
The coronavirus pandemic has forced Sabadell to enlarge its initial project of closing 10% of its Spanish branches, announced in October 2019, to the current 13% of the branches slated for closing.
Some of branches that have been closed during the pandemic will not be re-opened.
Since the financial crisis in 2008, the number of branches in the Spanish banking sector has declined by more than 40% while the number of employees has shrunk by more than 30%.
Spain’s economy has greatly suffered from the coronavirus crisis. Most economists predict the economy will go into recession in 2020, with more than a million jobs destroyed and skyrocketing public deficit and debt.
The Spanish banking sector has expressed a commitment to doing its part in helping to lessen the blow of the pandemic.
In April, Sabadell and its British subsidiary TSB said that senior management of both banks would give up their bonus awards for 2020, so that the banks can better reward junior staff who are helping customers deal with the virus.
“It is an act of responsibility at a time when all of us need to act with the utmost commitment and solidarity,” Sabadell chairman Josep Oliu said at the time.
The bank’s action on bonuses echoed similar decisions undertaken by senior executives at Spanish banks BBVA and Caixabank.
Supporting covid-hit customers
Lending institutions belonging to the Spanish Banking Association (AEB) and the Spanish Federation of Savings Banks (CECA) have taken voluntary measures to help mortgage customers affected by the COVID-19 outbreak.
People with a mortgage on their first home who are affected economically by the coronavirus outbreak may apply for a deferral of up to 12 months in the capital repayment.
Likewise, principal repayments on personal consumer loans are to be deferred for up to six months.
This means that these customers will only pay the interests on the mortgage loan, which will reduce considerably the amount they were paying until now.