Banco Santander Central Hispano (BSCH), Spain's biggest bank, is to close 1,000 branches, sell property and ask half its senior staff to take early retirement in an attempt to cut costs.

The bank, formed in a merger two-and-a-half years ago, said it hoped the moves would help it lift profits 20% in each of the next two years.

The branch closures come in addition to 1,400 closures already made following the merger and will leave BSCH with about 4,000 branches in Spain.

The reorganisation also involves the disappearance of the Santander brand after more than 100 years - to be replaced by a unified BSCH brand.

Management conflict

Analysts said this was intended to help smooth over a management conflict between Santander and Central Hispano factions at the bank.

"Destroying the Santander brand, in our view Spain's strongest, as part of an exercise to provide a smokescreen and divert attention from the current battle of wills between its senior managers [is] a... lamentable destruction of shareholder value," said Magnus Mathewson, analyst at Credit Lyonnais Securities in London.

The unified bank will be divided into retail and corporate divisions.

Banco Banesto, the bank's third brand, will remain independent but be delisted from the Madrid Stock Exchange.

Some analysts have speculated the unit might be sold.

Latin American loans

BSCH said it wanted to achieve cost savings of 902m euros ($776m; �549m) during 2002 and 2003 and sell more than 601m euros worth of property in Spain and Latin America.

The cost-cutting programme also includes plans to force half the group's senior management to take early retirement.

The bank did not say how many job losses the branch closure programme would entail.

As well as being Spain's largest bank, BSCH is also Latin America's biggest banking group, with operations in 12 countries.

Analysts said the need to find cost savings had come about partly because of economic problems in Argentina and Brazil.

This was forcing the group to divert more money to Latin America to protect against non-performing loans.

Following the 1999 merger, BSCH was also criticised by some analysts for not immediately identifying more opportunities for cost savings.