Details of the merger were announced on Friday as the coronavirus pandemic escalates pressure for more lenders to join forces in a fragmented market.
The combined entity expects to achieve € 770 million in annual cost savings by 2023 and targets additional annual revenue of around € 290 million. CaixaBank, a lender with strong Catalan roots now officially based in Valencia, will exchange 0.6845 newly issued shares for each Bankia share.
The new entity will operate as CaixaBank following the takeover of Bankia, a state-controlled bank that played a leading role in the Spanish financial crisis – when Madrid injected € 22.4 billion for address a large capital gap in 2012.
The 40% stake in CaixaBank’s largest shareholder, the La Caixa Foundation, which is one of the largest charities in Europe, will become 30% in the new entity.
Meanwhile, the Spanish state’s 62% stake in Bankia will translate to 16% of the extended group.
A combined CaixaBank-Bankia would become Spain’s largest lender in terms of domestic loan and deposit market share, although it lacks the extensive overseas operations of Santander and BBVA, currently the two largest. major banks in the country.
The CEO of CaixaBank, Gonzalo Gortázar, will become the CEO of the new bank, the president of Bankia, José Ignacio Goirigolzarri.
Banks first announced that they were discussing a possible combination earlier this month.
They said on Friday that the joint merger plan would be submitted for approval to the shareholders’ meetings of the two banks, which are likely to be held in November 2020, and that it is expected to be completed in the first quarter of next year pending the regulatory approval.
Bankia’s Goirigolzarri made clear his interest in consolidation in an interview with the Financial Times in 2018. But the momentum for Spanish banks to consolidate has grown over the past year due to the impact on revenues of the ultra-flexible monetary policy of the European Central Bank. and the fallout from the coronavirus pandemic, which has hit the Spanish economy particularly hard.
The banks stated in their merger agreement: “The current pandemic, as well as other structural challenges facing euro area banks (digital transformation, low profitability in the interest rate climate described, etc.) , make the CaixaBank and Bankia merger project a strategic opportunity for both entities. ”
They added that the acquisition “will reach a greater number of customers with an optimized cost structure and allow the two entities to jointly make digital transformation investments, which will allow new investments to be made more efficiently. . “