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Over the past year, the ERE tour has accelerated, driven by actions from the main Spanish banks as they reorganize their offices in Alicante province since the housing market slump. Since the bubble burst, the network has seen the disappearance of about two-thirds of branches, a trend that began to reshape the sector during the most intense phase of network expansion.

According to the latest balance sheet from the Bank of Spain, business deregistrations occurred throughout the previous year. In the province, 124 offices closed during the year, reducing the total to 640 and marking the second-largest decrease on record, surpassed only by the drop seen in 2012 when 179 branches vanished from the map. Back then, the collapse and the intervention of the FROB affected a large share of savings banks, including CAM, which was under Banco Sabadell’s influence that year. [citation: Bank of Spain, balance sheet data]

That moment signaled the start of a consolidation wave that appears to have reached its current apex with the final integration of major networks. The merger of popular with Santander and the CaixaBank-Bankia union dominated the recent adjustments. Last year, Santander reduced its footprint from 94 to 59 branches nationwide, while the newly formed CaixaBank ended December with 150 branches, compared with 186 for the two groups combined a year earlier. [citation: industry records, 2023-2024 filings]

But the momentum did not stop there. The other two heavyweights, BBVA and Sabadell, also restructured materially through two Employment Regulatory Files. This trimmed the number of branches from 94 to 76 for BBVA and from 160 to 139 for Sabadell, following the failed merger attempt between the two. [citation: regulatory filings]

commercial offices

While the four major Ibex banks led the downsizing, the broader market followed in their wake. Almost all assets across regions felt the squeeze; rural savings banks in some areas kept a footprint, yet many others used the openings left by predecessors to test new approaches. In many cases the expansion comes not through new branches but through commercial offices. These offices may look like branches, but they are typically affiliated with a specific bank through an intermediary broker, offering a cost-effective route to grow the network. [citation: market analysis]

The Spanish mortgage firm, which delivered the best decade in 2021, remains resilient amid broad branch closures.

The question now is how long the network contractions will continue. Recent reductions have somewhat cooled market sentiment, and workers report rising tensions at shareholder meetings. Staff representatives have intensified their scrutiny, and some employees argue that the digital shift of customer bases is advancing slowly, while managers push to maintain a strong in-branch presence. A campaign in Valencia, with the slogan “I’m big, not stupid,” prompted regulators to issue cautions to the industry awhile back. [citation: regional press coverage]

low profitability

In contrast, the picture in financial markets and for shareholders is different. As Ivie’s analyst Joaquín Maudos notes, the Spanish business climate showed an ROE of 6.8% in 2021, below the cost of capital, which hovers around 8%. After a negative 2020, that left little room for optimism. The strategy remains simple: cut costs to boost efficiency, which means trimming the branch network. There is room for further optimization, given that even after 2008 cuts Spain still hosts one of the busiest banking networks in the EU. [citation: Ivie briefing]

A rapid rise in interest rates could backfire by raising defaults, yet market forces are expected to support bank income. Maudos cautions that wide-scale breakthroughs are unlikely, and the increase in rates is likely to stay moderate. [citation: Ivie expert commentary]

Regarding possible cases of financial exclusion, Ivie’s deputy director emphasizes that the share of municipalities without banks is still smaller than those with banks. The absence of financial institutions is not merely a local worry; it intersects with broader public services like schools and health centers. He adds that solving this issue cannot rest solely on the banks, pointing to public administrations catching up on ATMs in some cities as a necessary step. [citation: Ivie briefing]

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