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CaixaBank and Bankia's merger gives birth to Spain’s biggest bank

Espagne
On the 09/21/20 at 7:36AM

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Stéphanie Salti, in Madrid

After long hours of negotiating last Thursday evening, the Spanish bank Caixabank on Friday unveiled its terms for acquiring Bankia under a shareholder agreement that values the publicly owned establishment at €4.3bn and creates Spain’s largest bank in terms of assets. Preliminary merger talks had begun on 3 September.

“In an environment with many strategic challenges, with interest rates at 0%, with the pandemic’s impact... we must react and act. This deal is the best option for shareholders, the public sector and the repayment of public assistance,” said José Ignacio Goirigolzarri, Bankia’s chairman, during a joint press conference held in the middle of the day.

Under terms of the agreements, Caixabank will offer 0.6845 shares for each Bankia share. The new entity will be worth more than €664bn in assets and will have more than 6700 branches and more than 51,500 employees. Under the CaixaBank name, Spain’s new n°.1 bank will be headed by Gonzalo Gortázar, CEO of CaixaBank, while Goirigolzarri will serve as executive chairman.

The new entity is targeting annual cost synergies of about €770m and additional annual revenues of about €290m. The group says it has not yet made a decision on possible job cuts resulting from the merger.

The Spanish state lowers its profile

The new giant is targeting a hard CET1 ratio of between 11.0% and 11.5% and a 28% improvement in CaixaBank’s earnings per share compared to market forecasts for 2022.

Once the merger has gone off, Criteria Caixa’s equity stake in CaixaBank will remain at about 30%, while FROB, the Spanish bank restructuring entity, will be a 15.5% shareholder of the new entity. Thus far, the Spanish state had held 61.8% of Bankia.