MADRID -- Spain’s biggest real estate lender announced Wednesday that it would slash 6,000 jobs and close nearly 40% of its bank branches in exchange for European bailout loans.
The European Commission approved restructuring plans for Spain’s financial sector Wednesday, including a $48-billion loan to four lenders nationalized by the Spanish government. Europe has offered Spain up to $130 billion to rescue its banks, severely hobbled by the country’s housing boom-and-bust. Madrid could still tap more of that total when it evaluates additional banks next month.
The bulk of the initial loan is earmarked for Bankia, the fourth-largest Spanish bank overall but the country’s largest property lender. Its failure last spring sparked fears of a wider Spanish meltdown and prompted politicians to turn to Europe for help.
Moments after officials in Brussels approved the aid for Spanish banks, Bankia’s chairman, José Ignacio Goirigolzarri, announced that the company would lay off 28% of its work force, shed $65 billion in assets and shut 1,100 Bankia branches. Many of those used to belong to seven regional savings banks that merged to form Bankia in late 2010.
“Our clients can be totally reassured because we have a viable and solid business in which they can be absolutely sure of their savings,” Goirigolzarri told reporters in Madrid.
Bankia has about 12 million customers, or about 1 in 4 Spaniards.
The European Union’s competition commissioner called the bank bailout approved Wednesday a “milestone” for the Eurozone.
“Our objective is to restore the viability of banks receiving aid so that they are able to function without public support in the future,” Joaquín Almunia, the competition commissioner and a Spaniard, told reporters in Brussels. “We also make sure that banks use no more than what is necessary of taxpayers’ money to restructure and do not go back to unsustainable business practices.”
The Bankia layoffs will exacerbate Spanish unemployment, already at an all-time high of more than 25%. The Organization for Economic Cooperation and Development forecast this week that Spain’s jobless rate would approach 27% next year.