* Banking unions expect 12,000 job losses this year
* Unions to discuss cuts with Santander, Bankia on Jan. 9
* Banking woes to hit Spanish unemployment in 2013 (Recasts, adds detail and background)
By Tracy Rucinski
MADRID, Jan 4 Spanish banking unions are braced for thousands more job cuts this year, starting with redundancies at Spain's largest bank Santander after its merger with subsidiary Banesto.
Unions said on Friday they expect between 3,000 and 4,000 jobs to go as a result of the merger and would hold talks next week with the bank.
With 6,000 jobs also going at Bankia and thousands of redundancies at other nationalised banks, the year has started on a gloomy note for many workers in Spain where around one in four of the workforce is already jobless.
In the financial sector alone, banking unions estimate 12,000 job losses this year, on top of about 35,000 cuts since the middle of 2008 when Spain's property crisis began to grip the industry.
Spain has received 40 billion euros in European aid to restore its financial system, but as a condition of the aid - much of which will go to nationalised lenders including Bankia - troubled lenders must cut more jobs and sell assets.
Santander last month announced plans to fully absorb its 110 year-old Banesto brand, closing 700 branches to cut costs and help position itself for any further downturn in Spain's sickly banking sector.
The bank had warned of job losses stemming from the branch closures after the Banesto tie-up but said they would be implemented gradually.
"We'll start to talk about the cuts with Santander next week. The bank hasn't confirmed any numbers, but we think the final figure will be closer to 3,000," said Jose Miguel Villa, secretary general of the services federation for Spain's second-largest union UGT.
A Santander spokeswoman said the bank will meet with unions on Jan. 9 but would not give any further details such as on the scale or timing of any reductions.
Santander has said that the job cuts would be made through early retirements, incentivized departures and transfers to other units of the group.
The bank was one of the best performers on Spain's blue chip index last year, rising from around 5.26 euros at the end of 2011 to close the year at just over 6 euros thanks to its handling of the financial crisis.
The stock was up 0.1 percent at 6.31 euros at 1110 GMT.
Almost every day brings fresh unemployment news in Spain, where on average 2,000 jobs were lost a day last year, a number that many analysts expect to rise in 2013 as struggling companies cut staff in a weak economy.
"This is going to be a tough year," Villa of UGT said.
Unions will also begin talks with state-owned Bankia on Jan. 9 over previously announced plans to lay off 6,000 of its 20,000-strong workforce, Villa said.
In other sectors, Spanish airline Iberia is negotiating 4,500 job cuts - a quarter of its workforce - with unions as part of a wider restructuring it says is necessary for its survival. (Editing by Hans-Juergen Peters and David Holmes)