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BANKING BAILOUT

Brussels demands massive job cuts at Bankia in exchange for bailout

Novagalicia and other nationalized banks also facing cutbacks as European Commission finalizes 35-billion-euro operation

Bankia will be forced to shed around 6,000 jobs and Novagalicia 2,000 as part of stringent conditions imposed by the European Commission in exchange for the multimillion-euro bailout for the Spanish banking system.

Bosses at the four nationalized Spanish banking groups — Bankia and Novagalicia, plus CatalunyaCaixa and Banco de Valencia — agree that those entities receiving European aid will be submitted to a severe slimming regime, starting with staff, negotiated by Spanish authorities and EC Competition officials.

“And that punishment will be noticed by the shareholders, the bondholders, preferential shareholders and the employees,” say executives of the four banks of the conditions contained in Brussels’ final bailout document, due to be unveiled on Wednesday. As well as the job losses at Bankia and Novagalicia, the EC is also demanding the elimination of 1,000 offices, according to sources close to the negotiations. CatalunyaCaixa is also to suffer the loss of 1,000 staff members, though the EC could condition that on its sale to a competitor.

Brussels also wants a complete restructuring of the bailed-out banks, demanding they concentrate their business in their regions of origin and in family banking. Sources say the final figure for the bailout of the nationalized groups will be close to 35 billion euros — some eight billion euros lower than the requirements of 43.6 billion determined by the independent analyst Oliver Wyman.

The state Orderly Bank Restructuring Fund (FROB) is set to receive the money on December 15, ready to hand over to the nationalized banks on December 30, in time to balance their 2012 accounts.