Spain's Caixabank, Bankia to close merger in coming days, sources say

MADRID (Reuters) – Spain’s Caixabank (CABK.MC) and Bankia (BKIA.MC) could close their merger deal to create the biggest lender in Spain with more than 650 billion euros ($770 billion) in assets within the next few days, two sources with knowledge of the matter said.

Bankia Chairman Jose Ignacio Goirigolzarri would become the chairman of the merged group, while Caixabank Chief Executive Officer Gonzalo Gortazar would be its CEO, the sources said.

Caixabank and Bankia, which is state-controlled after a 2012 bailout, declined to comment.

Shares in Bankia jumped almost 30%, while Caixabank was up almost 12% in early Friday trading.

Though the number of lenders in Spain has shrunk to 12 from 55 since the 2008 financial crisis, the COVID-19 pandemic is putting banks under more pressure to consolidate as they set aside costly provisions to cope with the crisis.

An environment of low interest rates in the euro zone has also been weighing on the sector and regulators have been pushing for lenders to merge as a way to reduce costs.

The all-share deal is still being finalised, but based on Thursday’s market capitalization the state’s 61.8% stake in Bankia could fall to around 14% of the new entity, while Caixabank’s foundation, its main shareholder, would have around 30%, the sources said.

Consumer Rights Minister Alberto Garzon told Canal SUR that the best way to protect the state’s interest was to keep a stake in Bankia. [nLUN2E600K]

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