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Financials

UPDATE 2-BBVA plans to cut 16% of workforce, fifth of branches in Spain

* BBVA plans to cut 3,800 jobs in Spain

* Lender would close 530 branches (Adds BBVA reference to letter sent by the bank to employees)

MADRID, April 22 (Reuters) - BBVA is planning to cut around 16% of its banking staff and more than a fifth of its branches in Spain as it grapples with growing competition from fintech companies offering online banking services.

The bank’s management told the Comisiones Obreras (CCOO) union they wanted to cut 3,800 jobs and close 530 branches, about 21% of the bank’s locations, to adapt to a customer shift towards online banking.

The management gave details of the cost cuts at a meeting, the union said in a statement, adding that the figure was “outrageous”.

BBVA confirmed they had also sent a letter to employees, seen by Reuters, detailing the number of job cuts.

Spanish and European lenders are pursuing strategies to cut costs, either alone or through tie-ups, as their overall profitability is also hit by rock-bottom interest rates.

On Tuesday, BBVA’s Chairman Carlos Torres told shareholders that the upcoming restructuring plan was needed to secure the future sustainability of the bank.

BBVA’s corporate centre and 2,482 branches of its retail network in Spain employ 23,300 people. Both the bank’s letter and CCOO said around 800 employees affected by the plan were working at the corporate centre and other management offices, while the rest are at the retail network.

Based on the outcome of previous negotiations, the actual number of job cuts could ultimately be lower.

Shares of BBVA were up 2.5% on Thursday afternoon after the announcement. Shareholders and analysts had expected a smaller payroll downsizing.

Just two days ago, Caixabank, now Spain’s largest domestic bank after buying rival Bankia, announced one of the biggest staff reductions in the country’s corporate history.

Despite a halving in the number of branches since the financial crisis in 2008, Spain is still one of the countries with the densest banking network in the world, with nearly 50 branches per 100,00 adults, according to the IMF.

The number of bank employees has already fallen by almost 35% compared to December 2019, according to data from the Bank of Spain. (Reporting by Jesús Aguado; additional reporting by Emma Pinedo; editing by Inti Landauro and Kirsten Donovan)

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