Caixabank and Bankia approve merger to create Spain’s largest lender, sources say
MADRID (Reuters) – Caixabank CABK.MC and Bankia BKIA.MC Thursday approved the terms of a proposed merger that will create Spain’s largest national bank with around 600 billion euros ($ 710 billion) in assets, two sources familiar with the matter said.
Caixabank and Bankia declined to comment.
Meetings of the board of directors of the two banks called to discuss the merger on Thursday ended with approval of the deal, one of the sources said without adding further details. The two banks are due to give a press conference on Friday to reveal financial details of the merger.
The merger is expected to kick off a new wave of consolidation for European banks struggling to cope with record interest rates and the economic slowdown caused by the COVID-19 pandemic. Other transactions are expected to follow in Spain.
The two banks’ negotiating teams had accepted the principle of the merger on Tuesday evening and the members of the board of directors were to approve it.
The transaction has been described as a merger, but it is in fact a takeover by Caixabank as it is almost three times as large as Bankia in terms of market value and almost twice as large in terms of ‘assets.
Caixabank plans to offer a premium of between 15% and just over 20% over the average Bankia share price over the past three months, valuing Bankia at around € 4 billion (€ 4.7 billion dollars), a source with direct knowledge of the operation said Monday.
Bankia stock closed little change Thursday at 1.4405 euros giving the lender a market value of 4.4 billion euros, while Caixabank rose just over 1% to close at 2.065 euros.
Since the merger was announced on September 3, Bankia shares have risen by around 39%, while Caixabank has gained 14%, giving them a combined market cap of € 16.8 billion, according to calculations by Reuters based on data from Refinitiv.
Report by Jesús Aguado; edited by Sonya Dowsett, Ingrid Melander and Marguerita Choy