The European Commission has approved a 37 billion euro bailout for four Spanish banks in exchange for massive job cuts and branch closures.
The funds approved will be provided by the European Stability Mechanism, the eurozone bailout fund.
Spain has negotiated a banking bailout worth 100 billion euros but said it won’t claim the full amount.
Joaquin Almunia the European Union Competition Commissioner made the announcement:
“The European Commission has approved the restructuring of four Spanish banks. The total is 37 billion euros. It means the banks will now be viable in the mid to long term without further public assistance.”
Bankia gets a 18 billion euro slice of the bailout, Catalunya Bank 9 billion euros, Novagalicia 5.5 billion and the Banco de Valencia a 4.5 billion euro boost.
The biggest of the Banks, Bankia are to axe 6,000 jobs, a quarter of its workforce, and reduce its branch network by 39 per cent. Bankia’s collapse and request for help prompted Madrid’s bailout call.
Catalunya Bank looks set to slash 1,000 jobs and Novagalicia twice that.
Banco de Valencia has yet to go public on job cuts.