CaixaBank and Bankia, Spain’s third and fourth largest banks, have confirmed they are in merger talks. Such a move which would create a bank with assets of more than $676bn. Although this would still leave a newly formed Caixa/Bankia group considerably behind Santander, Spain’s largest bank, which has $1710bn in assets, it would place the new bank in the same ballpark as BBVA’s $785bn assets.
On the retail side in particular, the new bank would be a substantial force in the market, with a larger retail loan book than rival BBVA.
The merger would continue the trend of consolidation in Spain’s banking market since the global financial crisis: Bankia itself was created in 2010 as the result of a merger of seven regional savings banks. However, regulators have continued to support consolidation as a means of cutting costs and increasing efficiency. While the Spanish banking industry is in generally good health following some difficult years, the Covid-19 pandemic could cause substantial problems for the sector, as The Banker reported in July.
Shares in rivals Sabadell and Bankinter increased in value in the wake of the announcement, amid speculation that there may be increased interest in deal-making among Spain’s biggest banks.
