mergers and acquisitions

Shareholders in Spain’s Bankia approve CaixaBank merger

Agence France-Presse

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Shareholders in Spain’s Bankia approve CaixaBank merger

BANKIA. Spanish bank Bankia's logo is pictured in Madrid on September 4, 2020.

Photo by Gabriel Bouys/AFP

Under terms of the deal, Bankia shareholders will hold 25.8% of the new entity while shareholders in CaixaBank would hold 74.2%

Bankia shareholders on Tuesday, December 1, approved a planned merger with larger rival CaixaBank to create Spain’s biggest domestic lender, transforming the nation’s banking landscape.

“We are about to see the creation of the largest bank in Spain,” Bankia president José Ignacio Goirigolzarri told shareholders at an extraordinary general meeting in Valencia. 

The Spanish state is the largest shareholder in Bankia, but following the merger its 62% stake will drop to 16% in the new group. 

CaixaBank shareholders are set to meet Thursday, December 3, over the merger. 

Leaders of both banks are confident the deal will be approved by regulators, allowing them to implement the merger by the end of the 1st quarter in 2021 with full integration by the year’s end. 

Goirigolzarri, who is to preside over the new entity, defended the deal as “the best response to the challenges facing the sector in the medium term” including low profitability, a surge in online banks, and the coronavirus pandemic. 

“The impact of COVID and its continued existence over the long term in an environment of clearly negative interest means the path we must follow for the next few years is one we must travel together,” he said.

The new entity, which is to retain the name CaixaBank, will hold a 25% share of Spain’s domestic banking market, with combined assets worth 660 billion euros ($790 billion) and 20 million customers. 

Under terms of the deal, Bankia shareholders will hold 25.8% of the new entity while shareholders in CaixaBank, Spain’s largest domestic bank, would hold 74.2%.

During the Bankia meeting, several shareholders expressed concern about job losses and office closures owing to an announced savings target of 700 million euros. 

“A merger process is clearly going to require a restructuring process” but at this stage, “we don’t have a clear idea of how it will look,” Goirigolzarri replied. 

In 2012, the Spanish government saved Bankia from collapse, spending 22 billion euros to bail out a lender that was considered a symbol of financial excess when the economy was mired in crisis.

The Spanish banking sector has seen a decade of consolidation with dozens of mergers.

The latest attempt, to fuse BBVA and Banco Sabadell, the country’s 2nd and 5th largest banks, failed however. 

And while the new CaixaBank is set to dominate the domestic market, Spain’s biggest banks remain Santander and BBVA, both of which have bigger international operations. –

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