July 3, 2020 / 10:51 AM / a month ago

FACTBOX-Spanish banks set to reduce excess capacity to cope with low rates, COVID-19

    By Jesús Aguado
    MADRID, July 3 (Reuters) - Spanish banks are under pressure to cut branches as they grapple
with the economic fallout from the COVID-19 and low interest rates.
    Spain is one of the countries with the highest number of branches per 100,000 adults in the
world, with 55.19. Italy and France had ratios of 40.88 and 34.85, respectively, while Germany's
ratio was 11.17, according to data from end-2018 from the International Monetary Fund. 
    Spanish bank's profitability ratio measured as a return on equity (ROE) stood at the end of
2019 on average at 7.1% compared to 5.8% by euro zone lenders, according to the Bank of Spain,
but higher provisions to cover the consequences from the pandemic are hitting their bottom line.
    The cost to income ratio - a measure of efficiency - stood at 52.7% at end of 2019,
according to data from the European Banking Authority, compared to an average of 64% of lenders
in Europe.
    The following is a list of Spanish banks with their number of branches and expected or
announced closures, financial agencies, their overall profitability and efficiency ratios at the
end of the first quarter:
                        Branches  Expected branch  Financial   Overall     Overall
                        in Spain  closures in      agencies    efficiency  profitability
                                  2020 in Spain    in Spain    ratio       ratio (ROE)
 Santander              3,222     not disclosed       792        47.2%         6.3%
 BBVA                   2,593       160            ***700        45.0%      ***2.4%
 Caixabank              3,846      *300              ****        67.6%         4.5%
 Bankia                 2,269       140              ****        56.1%         3.0%
 B.Sabadell             1,847       235              ****        49.3%         1.8%
 Bankinter                364     not disclosed       397        43.3%        10.2%
 Unicaja                1,031       100*****          191        54.3%         4.7%
 Liberbank              **560     not disclosed     **200        58.0%         2.6%
*     In November of 2018, Caixabank laid out a plan to cut a fifth of its branches in Spain by 
      2021 which it expects to bring forward to 2020. It is now integrating 300 branches into   
      bigger ones.
**    Estimated data by the lender as of end of Q2
***   BBVA has 1,392 overall financial agents, of which half are physical agencies and the other
      half remote agents. The ROE profitability ratio does not take into accout the goodwill 
      impairment in the United States as of first quarter of 2020 and end of 2019 for an amount 
      of 2.08 billion euros ($2.34 billion) and 1.32 billion euros, respectively.     
****  These banks have different distribution models. In the case of Bankia, the bank sells its 
      financial products through insurances agents thanks to an agreement with insurance company
***** Branch closure at Unicaja expected to take place between 2020-2022

($1 = 0.8886 euros)

 (Reporting By Jesús Aguado; editing by Emma Pinedo and Elaine Hardcastle)
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