Bankia to lay off 4,500 employees after accord with unions

Severance pay set at 30 days wages per year in service

Labor representatives and the management of Bankia in the early hours of Wednesday reached a pre-agreement on the layoff of some 4,500 workers at the nationalized bank, according to union sources.

Bankia had been initially looking to dismiss 4,900 employees, but the deal still constitutes one of the biggest ever labor adjustment plans (ERE) in the banking sector. The lender, which was taken over by the Bank of Spain after coming unstuck because of its over-exposure to the ailing real estate sector, is looking to shed a further 1,000 jobs through the disposal of units.

Union sources said the solvency package revolves around about 30 days wages for every year in service up to a maximum of 22 months. The bank had initially offered 22 days with a maximum of 14 months.

Bankia is obliged to slim down its operations under the terms of the 40-billion-euro bailout the government received from its European partners to recapitalize the sector. Bankia will receive the bulk of that in the form of an 18-billion-euro capital injection by the state.

The pre-agreement stipulates that 39 percent, or 1,700, of those to be dismissed will take the form of early retirement for those over 54 years old, a UGT union official said. They will receive 60 percent of their salary up to a maximum of 350,000 euros until they reach 61 or 63 years old, with the bank contributing to a company pension plan for one year. The bank will also make contributions for early retirees to the Social Security system.

“The agreement emphasizes the voluntary nature of the measures agreement for the workers,” the financial sector division of the CCOO union said in a statement. Workers have 15 days to sign up for the deal, which also leaves open the possibility of employees being transferred in the case of branches where they work being closed.

Earlier this week, Banco de Valencia, which was also nationalized, reached an agreement with labor unions to lay off 795 workers, including early retirement for 231. The terms of the ERE include compensation of 30 days for every year worked up to a maximum of 24 months’ salary for those aged under 50 and 36 months for those over that age.

Novagalicia, another lender taken over by the Bank of Spain, wants to lay off 2,508 workers and close 327 branches through to 2017. Workers were due to strike in protest at the plan. Unions at Bankia and Banco de Valencia called off planned stoppages after reaching agreements on layoffs.

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