20% Of Spanish Caixabank Branches Set To Close Spain News

Caixabank has announced plans to close one-fifth of Spanish branches to boost their profits.

Over the next three years, Caixabank plan to close around 20% of their branches across Spain as they try to increase their profitability and engage in the digital transformation. Caixabank plans to close 821 banks across the country taking the number of branches in total to 3,640.

Unfortunately, as a result of the 821 closures, there will be job losses. However, Caixabank declined to comment on the details of how many people will lose their jobs. At the moment, the bank employs 32,600 people across Spain. The closures come as part of the business’ 2019-2021 strategic plan.

The goal of their strategic plan is to increase their standing on the tangible equity ratio (ROTE). At the moment, their ROTE sits at 9.4%. The aim is to ensure that it is above 12% by 2021. At the moment, Spanish banks are struggling to increase their profitability due to historically low interest rates which make it more difficult for banks to increase their earnings from mortgage loans.

Shares in Caixabank are down 4.5% compared to 2017. A company that previously focused on reaping profits from dividends on their holdings which used to include a 9.4% stake in oil firm Repsol. As a change in strategy, Caixabank sold their stake and took over BPI to boost profits. They forecast revenue growth of 7% under their new plan.

By aiming for a compound annual growth rate of over 5% in the next three years, they want to outpace the current 3% forecast rate. Caixabank will drive this by reducing non-performing assets to €7 billion by 2021 as well as reducing non-performing loans from 5.15% to less than 3%. The bank also plans to drive revenue by increasing net income interest to around 5% and increasing fees, commission and insurance income too.

As part of the strategy, Caixabank aims to continue paying out over 50% of their profits in cash dividends.