CaixaBank posts loss over huge post-merger layoffs

Spain’s CaixaBank on Friday posted a second-quarter loss over redundancy costs associated with 6,500 layoffs following its mega-merger with smaller rival Bankia to form the country’s largest domestic lender.

The bank posted a quarterly net loss of 605 million euros (about $720 million) due to restructuring costs after paying out 1.8 billion euros to finance the redundancies.

They were initially expected to affect 8,300 jobs — or one in five — but the figure was reduced following talks with the unions.

Without that cost, the bank would have registered a net benefit of 764 million euros.

The main aim of the restructuring was to eliminate redundant positions and branches following the merger, with the move expected to save “up to 940 million euros per year,” CaixaBank’s chief executive Gonzalo Gortazar said in a statement.

Completed at the end of March, the merger has transformed the Spanish banking landscape, creating the largest national bank with combined assets of more than 663 billion euros and 21.1 million customers in Spain and Portugal.

The figures put it ahead of Santander and BBVA, both of which have a more international presence.

Despite the restructuring costs, the new group’s net profits grew to almost 4.2 billion euros in the first half of the year.

Excluding the merger, the adjusted profit was much lower at nearly 1.3 billion euros, although it was a big improvement on the first half of 2020 when it fell to 205 million euros due to exceptional provisions to strengthen solvency in light of the economic fallout of the coronavirus pandemic.

emi/hmw/wai