Spanish banks, which slimmed down after a property boom went bust in 2008, are once again closing branches and slashing jobs as their profitability is hit by stiff competition.
The country's three biggest lenders -- Santander, BBVA and CaixaBank -- last week all posted lower first quarter net profits, especially in Spain, which is grappling with a jobless rate of 21 percent
Santander, the eurozone's biggest bank by market capitalisation, plans to close 450 smaller branches and cut 1,400 jobs in Spain, about five percent of the staff in its home market, through voluntary departures.
It expects the move will save between 75 and 110 million euros ($126 million) per year from 2017.
Barcelona-based CaixaBank, Spain's third-largest bank, plans to cut 500 of its 32,500 jobs in the country through early retirement agreements as it seeks to trim its salary costs.
"We fear that the job cuts in the banking sector have not ended," Ignacio Soto of the UGT union, one of Spain's largest, told AFP.
Spain has the densest bank branch network in western Europe, with 8.6 branches per 10,000 residents, according to consultancy Roland Berger.
The average in the entire European Union is five branches per 10,000 residents.
The country's banking network already underwent a deep restructuring after the collapse of a decade-long property bubble in 2008 sent the Spanish economy, the eurozone's fourth largest, into a tailspin.
The crisis led Spain to take a 41.3 billion euro loan from the European Union to restructure its banks which were saddled with property and loans whose value had plunged.
Between 2008 and 2015 the sector shed 75,000 of its roughly 278,000 jobs and more than 13,000 branches closed their doors, according to the Bank of Spain.
Struggling regional savings banks merged or were brought by Spain's large lenders.
- Price war -
Banks began to perform better after Spain returned to growth in 2014 as demand for loans for both consumers and businesses rose.
Lenders reduced their exposure to the troubled real estate sector.
Spanish banks' bad debts as a percentage of total loans fell from 13.6 percent in December 2013 at the height of the crisis to 10 percent in February.
The rate is still two times higher than the average in the eurozone.
While households are willing to spend more, they remain cautious when comes time to take out consumer loans, said Isidro Soriano of the Roland Berger consultancy.
To attract quality customers -- professionals with high salaries and small and medium-sized businesses -- banks have launched a "price war" which reduces their margins, said Renta4 analyst Nuria Alvarez.
The European Central Bank's cuts to interest rates as it tries to spur growth have also hurt Spanish lenders' profitability as it has lead to lower payments on loans for consumers and businesses.
The head of the Spanish Banking Association, Jose Maria Roldan, has warned that "bank customers will have to get used to paying" for services which up until now have been free.
Spanish banks, like their peers worldwide, are also dealing with a shift to online and mobile-based banking, especially by younger customers.
"The trend of branch closures and reduction of staff will continue," predicts the Roland Berger consultancy.
Spanish savings banks think tank Funcas predicts the banking sector could close 3,000 branches by 2019 and slash nearly 15,000 jobs to end up with 180,000 jobs.
With the Bank of Spain's governor, Luis Maria Linde, calling for a new round of mergers, the sector could undergo considerable consolidation in the coming years.