(Image courtesy of CaixaBank)
CaixaBank has agreed to buy state-owned lender Bankia in a €4.3 billion all-share deal that will create Spain’s largest domestic bank and possibly signal the start of a wave of consolidation in the European banking sector.
The deal comes just months after Italian lender Intesa Sanpaolo received approval for its €4.1 billion hostile takeover of smaller peer UBI Banca. Swiss banking giants UBS and Credit Suisse are also said to be in talks about a potential mega-merger.
The European Central Bank has been pushing for more consolidation to boost low profitability that has plagued the European banking sector since the 2008 financial crisis. In July, the ECB said it would lower the hurdle for bank mergers in the eurozone, this includes not automatically imposing higher capital requirements and allowing banks to use their own accounting models to calculate capital needs.
Caixabank’s largest shareholder, La Caixa Foundation, will hold 30% of the new group, while the Spanish state’s 62% stake in Bankia—which was partly nationalized in 2012 in a €22.4 billion bailout—will be reduced to a 16%.
The combined entity will have more than €664 billion in assets and a combined market value of over €16 billion. CaixaBank will exchange just over 0.68 new shares in exchange for each Bankia share, representing a 20% premium over the latter’s Sept. 3 closing price. Annual cost savings are expected to reach €770 million by 2023.
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