State-owned Bankia and the boards of Spain’s CaxiaBank have approved the M&A deal between two lenders, according to a release published on Friday. The merger will create the biggest retail bank in the country by market share.
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- The deal terms are likely to see CaxiaBank offer 0.6845 of its total shares for each Bankia’s. The newly created lender will manage assets greater than 664 billion euros.
- The combined venture plans to save around 770 million euros in annual costs by 2023.
- Newly formed financial giant is also targeting additional annual revenues of approximately 290 million euros.
- As European lenders have been under pressure concerning the global financial crisis, this consolidation could be a cost-effective solution to increase the profitability.
The solid equity position of CaxiaBank and Bankia will provide the capacity to absorb the costs of restructuring along with valuation adjustment. The combined entity will achieve a CET1 ratio of 11.6%, as stated by the banks.
