Spanish bank merger moves a step further forward

WHEN first mooted it appeared that there would be a merger between Spain’s third and fourth largest banks, Caixa and Bankia but the reality now appears that Caixa will retain its trading name whilst Bankia will slowly disappear.

Caixa had previously taken over Barclays Spanish retail business and now will become the largest Bank in Spain with total assets of more than €600 billion.

With much larger operations outside of the country, both Santander and BBVA will however remain as numbers one and two in worth.

Bankia has had a chequered history being created from the amalgamation of a number of savings banks, pushed into stock market flotation using what has now been recognised as false figures, seeing its chairman Rodrigo Rato disgraced and imprisoned and finally being taken over by the Spanish taxpayer.

The new business has been agreed in principle by the two banks but there is quite a way to go, including completion of due diligence, approval by Bankia shareholders and then, probably in the first quarter of 2021 it will be reviewed by the Ministry of Economic Affairs and Digital Transformation, the National Commission of Markets and Competition.

In addition, there has to be an indication of non-opposition confirmed from the Directorate-General for Insurance and Pension Funds, the Spanish Securities and Stock Exchange Commission (CNMV) and the Bank of Spain.

With 6,000 branches, the two banks will look to rationalise and there is little doubt that where there is cross over, closures and subsequent job losses will occur, which may not sit well with the current Spanish Government although it currently holds 62 per cent of Bankia shares and would be offered a seat on the new Banks board.

Time will tell whether this merger will go through, but assuming that the Spanish Government is in favour, then it should be relatively plain sailing