Santander said it had concentrated its efforts and investment in keeping pace with the digital age, with a progressive reduction of branches and functional redefinition of others.
Santander closed 60 branches in 2020 and expected to close another 30 this quarter to adapt to the business model, according to a letter sent on Monday to employees Lusa had access.
The Executive Committee, which signed the letter, began by justifying the note given recent news involving the bank, in an allusion to calls from trade unions to suspend the process underway given the worsening pandemic, and which, on January, 19 had led it to clarify that no process of termination by mutual agreement was in force, but rather proposals for pre-retirement or the termination of employment contracts.
“Banco Santander has been recognised for several years as the most solid bank in Portugal. In the last five years, we have taken over Banif and Banco Popular, which has led to an overlap of branches and services, both in the commercial network and in the central services,” it pointed out.
In addition to these takeovers, the bank said it had concentrated its efforts and investment in keeping pace with the digital age, with a progressive reduction of branches, functional redefinition of others, and the increasing automation of processes and functions at a central service level.
At the same time, it has adapted the business model to new variants of banking activity and different requirements and levels of competition, stressing that this is a context of transformation mandatory for all banks that want to survive in the future, especially in the context of strong revenue compression and bearing in mind the increased competition with the entry of new agents (Fintechs and BigTechs) and the radical change in customer behaviour towards banks.
“In recent years, the profitability of the banks has been constrained by several factors that are known to all, with emphasis on the requirement for higher capital levels (from 2008 to today, the increase in the minimum regulatory capital from 8% to 12.5% implied, in the case of Santander Totta, the need for an additional €750 million of capital to simply operate), the existence and persistence of negative interest rates, and widespread limitations on commissions,” said the Executive Committee.
In national terms, the management pointed out constraints such as the bank’s cost to take over other banks and other sectorial rates, which today amounts to more than €74 million/year.
Santander added to these explanations the current customer requirements with digital services and permanent availability of banking services.
“Last year, sales on digital channels per active customer have increased significantly; the number of customers visiting a branch has been falling successively year after year (29% in two years), as well as the new customers attracted by this channel (22% in two years), a trend that will continue to grow in the coming years,” it added.
In this context, the bank, it reiterated, has been making for several years proposals for exit agreements (retirement or termination of contract) to many employees of the central services and commercial area, both managerial and non-directive.
A phenomenon which is common to the entire banking sector. Like other international ones, the group has been implementing the transformation of the business model in the European countries where it operates, namely with resizing in its subsidiaries in Spain, Poland, Portugal, and the United Kingdom.
“As before, during 2020, contact with employees continued, now with the necessary predominance of proposals for revocation agreements, presenting the bank to each employee with the best conditions in the sector and our economy, also ensuring a future monitoring network for each employee leaving the bank, which will include, among others, advice on professional outplacement, social support, health guarantees, along with the maintenance of many of the conditions enjoyed by the bank’s employees,” it said.
The Executive Board said that this adjustment might continue during 2021, in line with the closure of branches and resizing of central services, noting that the bank closed over 60 branches in 2020, and expects to close around 30 branches during this quarter, with automation and process changes in central services planned to be implemented this year.