James Warren
NEGOTIATIONS are underway for a merger of two leading Spanish banks that if successful, will create Spain’s largest banking institution.
According to the latest account figures of Bankia and Catalan bank Caixabank, the merger will give the super-company assets totalling €664 billion.
Details of the negotiations are being kept firmly under wraps but both banks have confirmed that talks are underway.
The move has been born from financial uncertainty in Spain, with low interest rates and the impact of COVID-19 on lending rates.
It is hoped that a merger will increase the profits of both entities after dramatic losses thanks to the pandemic.
There will also be pressure from International Financial Authorities who are pushing to accelerate mergers between large finance corporations to help rebuild the Spanish economy.
The merger will be complicated since the state-owned Bankia received a large chunk of capital from the Orderly Bank Restructuring Fund (FROB) back in 2013.
The cash injections, designed to help save Spain’s rapidly failing banks, led to the government owning a 65% stake in Bankia after a €22.4 billion bailout.
It is not clear yet which bank will own the largest shareholder percentage but it is expected that Caixabank will take the reins in terms of employees and branches as the Catalan run bank is twice as widespread.
Current Bankia president Jose Ignacio Goirigolzarri is reported to take on the role as President of the new super-bank while Caixabank CEO Gonzalo Gortazar will continue his role as CEO, meaning the current President of the Catalan based bank Jordi Gual will likely depart.
Caixabank has recorded a much higher profit during the first half of 2020, with €205 million, compared to €142 million for Bankia.
