June 24, 2021

The boards of Caixabank and Bankia approve their merger to create the largest bank by assets in Spain




When on September 3 at night Caixabank and Bankia reported to the National Securities Market Commission (CNMV) that they were negotiating their merger, the feeling was that much of the work had already been done. They have been months of negotiations, at least since before June, to create the largest bank by volume of assets in Spain. Specifically, a national giant of around 630,000 million euros. Adding another more than 30,000 million is the complete photo of the entity at the group level. The resulting entity will also have more than 6,700 branches and will exceed 51,000 employees. There are still steps to overcome, but the hardest thing has already been done: its boards of directors have given its «OK» to merge.

Confidentiality has been key in this operation. Since Covid-19 began to wreak havoc on bank accounts, speculation of mergers began. Some, others and those from beyond. And when there were those who thought that Banco Sabadell would take the initiative, Caixabank and Bankia arrived with their announcement. Still, getting to this point of near no return has not been easy. A bank that, after the merger is executed, will touch the 25% of market share in Spain, under the Caixabank brand, although at first the two will coexist.

A few days ago the merger by absorption encountered many obstacles in the face of the FROB’s demands to have a bigger piece of cake in the resulting entity, and at the expense of the composition of the board of directors. Finally, the agreement reached: Bankia will be around 15-16% of the capital and the La Caixa Banking Foundation -which has been the one that has pulled the strings, rather its president, Isidro Fainé- ensures the 30% that appeared between its lines red. For the board of directors, the understanding has been in 15 members; Jose Ignacio Goirigolzarri CEO with limitations and Gonzalo Gortázar as CEO with extensive functions; a majority of independent directors (ten), more in the style of the current Bankia, and with proprietary directors for the La Caixa Foundation and the FROB. Thus, the State will have a representative on the body.

The details that are known are scarce. Secrecy has surrounded the operation, but a posteriori there will be no lack of public communication – an area, Communication, which will be for Goirigolzarri-.

Tomorrow there will be a press conference at 12:00 to announce the terms of the merger. The union that will give birth to the largest bank in Spain requires it. The event will be attended by the senior staff of the management team; in this case, at least, Goirigolzarri and Gortázar. Face to face to give an account to the public opinion of the operation, knowing that at least 15% of the new bank will belong to the State as inheritance of the public rescue to Bankia, which amounted in total to something more than 24,000 million euros.

One of the particularities of the announcement lies in the place chosen to carry it out. The press conference will be held at the headquarters of Caixabank in Valencia, with Goirigolzarri (Bankia) at the helm. The resulting entity will launch for the first time in a public event in the city of Turia. It is there that the two banks have their current headquarters. The symbology is served. A Catalan bank like Caixabank throughout its life, making known how its union with an entity like Bankia will be executed, whose “owners” are in Madrid, in this case the FROB, the State, in short. A sign that the intention is that Valencia continues to be very important in the future of the entity.

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