A potential merger between Banco Sabadell and Bankia could be the most profitable in terms of benefits and cost savings among the different combinations calculated by the Barclays analysis team and, furthermore, it would not be as harmful as other assumptions with the branch and employee network.
The group resulting from this hypothetical operation could achieve an increase in net profits of 20% in 2022, according to the central scenario contemplated, which implies a proportion of layoffs of 50% of employees of each closed branch. In this case the number of offices considered redundant would amount to 775.
Total restructuring costs would be around 458 million euros, with a negative impact on CET1 capital of 0.3%. However, the annual savings would be placed at 241 million euros.
In this way, a Sabadell-Bankia consolidation would lead to an entity with revenues of about 7,935 million euros in 2022, with operating expenses of 4,984 million euros and an after-tax profit of 1,204 million euros (+ 20%), reports Europa Press.
In recent years, various combinations of bank consolidation have been suggested in the Spanish financial system. Now, in the face of the ‘new banking normality’ generated after Covid-19, where it is expected that less branches will be used and the digital channel will be used more, Barclays has analyzed to what extent certain mergers could improve profitability.
So although the Sabadell-Bankia merger could be one of the most profitable in terms of increased profits, an operation between CaixaBank and Bankia would mean a growth in earnings of 18% by 2022 after annual cost savings of 481 million euros.
However, the restructuring costs the hypothetical CaixaBank-Bankia group would have to face would amount to 1,099 million euros and would jeopardize the continuity of some 1,411 branches, since the proposed combination would lead to greater overlaps.
Furthermore, a operation between Banco Sabadell and Liberbank It would increase profits by 7%, although the annual savings would only be 57 million euros because the redundancy of the office network would remain in 193.
Meanwhile, a BBVA-Sabadell, which would produce a 6% increase in net profit in 2022, would allow the group to save 388 million euros annually after closing 1,232 branches.
In short, the Barclays analysis team has stressed that the network downsizing It is the most effective option for banks to improve their profitability, despite the fact that the cost of closings is high and difficult to calculate, depending on the strategy and agreement reached in collective bargaining.