Spanish not-intervened cajas consider Brussels aid insufficient

It seems that sums do not add up for Spanish financial sector. Still oversized, it has a surplus of approximately 40,000 employees and between 10,000 and 15,000 offices. This excess does not only occur in Spain. Roland Berger, the company that has designed most of the bank rescue for Spain, has just submitted a study on the banking sector in France according to which between 2% and 4% of existing branches will be closing per years in the coming future. It estimates that the 39,000 current offices should be reduced in 5,000, to 34,000. The reason for that are the new own funds and liquidity requirements imposed by Basel III.

In accordance with the same criteria, 10 bank offices in Spain should be closing a day over the next three years to have between 25,000 to 30,000 offices in total. This is the conclusion of a report by the Instituto de Estudios Bursátiles (Stock Markets Studies Institute).

In this report, a surplus of 41,000 employees would be laid off, which represents 16% of the total. The reduction of the banking network in Spain should be of 35% of the number of offices in January 2011, some 41,000.

The Spanish Minister of the economy, Luis de Guindos, said on Tuesday in Brussels that the not nationalized banking sector would need 1.5 billion euros. But banks insist this won’t be enough, speaking of more than 4.4 billion euros–which was the figure they estimated when Oliver Wyman’s report was published. According to the different audits commissioned by the Government, capital needs were of around 2 billion euros for CEISS, something less than 1,200 million for Liberbank, and 2,208 million for Banca Mare Nostrum. In conclusion, 1.5 billion for the three groups seems too little money.

In terms of staff cuts, only Liberbank has suggested unions to establish some temporary measures in order to prevent dismissals, including wage cuts and temporary suspensions of contracts of up to one year for a maximum of up to 60% of the workforce.

The measures were presented two months ago. Although the process is currently paralyzed. Next step is next on 20 December, when we’ll know the conditions imposed by the European Commission on the business plan of not nationalised banks which need public help, among them Caja3, Ceiss, Liberbank and BNM.

Before knowing the conditions of the EU Executive, suspension of contracts proposed by Liberbank would be for up to one year and 60 percent of the workforce would be affected from January 2013 to December 21, 2015. Given the harsh conditions imposed by Brussels for the restructuring of the nationalized banking this process is considered unavoidable.

Working hours reductions for the staff would also be in place. Afternoon shifts would be eliminated and half-hour would be reduced in the morning shifts. Pay cuts would affect all employees during the next four years, with a minimum of 7% cuts for the staff and up to 18% of the managing team fixed income.

Estimates are different for the rest of the banking groups depending on the mergers results. Anyway what appears as insufficient is the necessary amount of billions needed to clean up the sector.