CaixaBank and Bankia in talks for €650bn merger

Espagne
On the 09/04/20 at 7:47AM

by

Adrien Paredes-Vanheule

The Spanish state would have a 14% share in the new entity if the operation goes on.
Bankia headquarters in Madrid
(Bloomberg)

Spanish financial sector consolidation is underway. Two of the five largest local banks, CaixaBank and Bankia, have confirmed on Thursday that they were discussing about the option of a potential merger with the agreement of their respective boards. Together, the assets of both companies would reach €650bn and make the entity resulting from the merger the largest Spanish banking group. As for investment funds managed by the companies, CaixaBank AM (number one in Spain) and Bankia Fondos (number four in Spain) had total assets of €64.8bn as of end June 2020 according to Inverco's data. 

In a statement, CaixaBank specified that an all-share merger was discussed between both institutions; without having reached an agreement so far. Bankia said a proposal to initiate a study and an analysis has been submitted to Bankia’s governing bodies. "This proposal will enable the Board of Directors to take the corresponding informed decision, relying on suitable advisory for this purpose," the release said.

Bankia is currently held at 61.8% by the Spanish state and that since 2012, through the Spanish executive resolution authority FROB which will have the last word in the merger talks. Spanish trade newspaper Cinco Días, citing sources from the ministry of Economic Affairs, pointed out that the value creation possibly brought by the merger and the recovery of the public aid granted to Bankia will be analysed. Bankia has received €24bn in public aid from the Spanish state, of which only €3bn have been recovered so far. According to El Confidencial, the Spanish government may be the second largest shareholder of the new entity, if the merger goes on, with a 14% holding. Criteria Caixa, which currently holds 40% of CaixaBank, would be the main shareholder.