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Banco Santander said to close 425 branches as it overhauls Spanish network

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Banco Santander said to close 425 branches as it overhauls Spanish network

has told unionofficials that it will close 425 branches in Spain in 2016 in what a source saidwas the first step toward reshaping its physical network in the country by 2018.

The bankwill provide union officials with details of how many employees are likely to beaffected by the closures in a meeting scheduled for April 6, the Santander branchof the Comisiones Obreras union said on its website March 31.

"Wewill participate in the negotiation process to ensure that any [headcount reduction]is voluntary," the union said.

Santander,whose structure has been shaken upsince Executive Chair Ana Patricia Botín replaced her late father at the helm in2014, reduced its Spanish network by 44 branches over the course of 2015 to 3,467,a number still almost 4x higher than in the U.K., where it makes more money, accordingto its annual report. It had 24,216 employees in its home country as at end-December.

The bankaims to "concentrate around 450 branches with smaller service capabilities… to achieve larger, better equipped branches," as it also boosts its digitaloffering via mobile phone, Internet, phone and ATMs, a source close to the negotiations,who did not want to be named, said in an interview.

The currenteconomic environment and increasing regulatory costs across the industry suggestthat the bank needs to speed up its transformation plans, the source said.

Mostof the branches affected have one to three employees, the source said.

At thesame time, the bank is aiming to convert 350 Spanish branches to the larger, new-styleoffices this year and 1,000 by 2018, the source said, adding that the bank intendsto preserve its presence in all the towns in which it currently operates.

The bankis also cutting costs in its corporate center, in line with plans to reduce thenumber of its business divisions to 10 from 15, the source said.

Santander'snet operating income in Spain fell 15.7% year over year in 2015 to €2.65 billion,compared to an increase of 15.4% to €3.03 billion in the U.K., where it had 858branches for its 25,866 employees in that country. It had 13,030 branches aroundthe world and 193,863 employees.

The cost-cuttingdrive comes as Santander's common equity Tier 1 ratio as at end-December of 10.05%in fully loaded terms is seen by some analysts as too close to comfort to regulatory minima. It aims to boostthis to over 11% by 2018.

Groupattributable net profit rose by 12.9% year over year in 2015 to €6.57 billion.