Caixabank and Bankia merge to form Spain's biggest bank
Spain’s third and fourth-largest lenders, Caixabank and Bankia, have agreed to merge in a deal that will create the country's biggest domestic bank by assets.
The two banks plan to make €770m in annual cost savings by 2023 as a result of the €3.8bn tie-up, which will create a lender with a market capitalisation of more than €16bn and will operate under the Caixabank name.
Santander, which has a large international presence including on the UK high street, remains the country's biggest bank.
Bankia, the smaller of the two, was formed in 2010 by merging seven of Spain’s regional savings banks and was once at the centre of the Spanish banking crisis, triggered by its exposure to toxic property assets.
In 2012 the Spanish government was forced to part-nationalise the lender and customers pulled an estimated €1bn out of the bank.
Caixabank's takeover of Bankia will slash the Spanish government's stake in it from 62pc to 16pc.
Gonzalo Gortázar, Bankia's current chief executive, will retain his role position and said the deal will "allow us to face the challenges of the next 10 years with greater scale, financial strength and profitability".
Banking mergers have been rare in recent years as integration in the sector is complicated and risky - but low interest rates and the coronavirus pandemic have piled fresh pressure onto Europe's banking industry and could trigger the long-awaited wave of consolidation.
Swiss banks UBS and Credit Suisse, which together manage assets worth £4 trillion, are also reported to be in informal talks and UBS chief Sergio Ermotti has repeatedly said that consolidation in the sector is unavoidable.
The attitude from European regulators on blockbuster mergers is also softening. The European Central Bank said in July that “well-designed and well-executed consolidation” could address the “overcapacity and low profitability problems that have been damaging the European banking sector since the last financial crisis”.
Shares in Bankia and Caixabank dipped after the deal was announced on Friday.
