CaixaBank is discussing a merger with rival lender Bankia to create the biggest domestic bank in Spain with €650bn ($768.7bn) in total assets.
The companies are looking at an all-share transaction agreement, and the deal may see Barcelona’s CaixaBank taking over its Madrid rival Bankia.
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According to media reports, the potential merger could create a bank with combined market value of €14bn ($16.6bn).
Based on Citigroup’s calculations, the combined entity is expected to have a market share of 23% by assets, 26% by loans and 24% by deposits.
In terms of assets, loans and deposits, the new entity will be the largest lender among the likes of Banco Santander, BBVA, and Banco Sabadell.
Currently, the talks are at a preliminary stage and a deal is expected to be reached by next week.
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By GlobalDataThe discussion comes at a time when the European economy has been badly hit by the Covid-19 pandemic, and a potential agreement could spur mergers across the region.
The proposed merger will be the first major deal in years.
CaixaBank, through this deal, aims to expand its footprint in Spain’s consumer and corporate banking space.
CaixaBank operates 3,846 branches in the country, and employs over 35,000 people.
The bank has €11bn in market value and is particularly strong in insurance.
Back in 2012, the Spain government, through its rescue fund Frob, bailed out Bankia and acquired a 61.8% stake in the lender.
Since then, the government is mulling to sell its stake in the lender.
Pursuant to the merger, Frob will own 17% of the new bank, while CaixaBank – through its Caixa Foundation – will be the majority stakeholder with a 30% stake.
Bankia operates 2,267 branches in Spain and employs 16,000 people. It specialises in mortgages and has a market value of €3.2bn.
