The Boards Caixa of Directors of Caixa Bank and the state-owned bank Bankia respectively approved the merger plan between the two banks that would create Spain’s largest bank.
The new bank created will have a stock market value of €17bn. It will retain Caixa bank’s brand name and will hold assets of more than €665bn.
The General Meetings of shareholders of both banks are expected to approve the deal.
Due to the increasing pressure on banking schemes in the EU and as a result of the growing recession caused by the covid-19 pandemic, it forces banks to move between mergers to cope with competition from a better position in the post-Covid-19 era.
The new banking scheme is expected to present CET1 ratio of 11,6%. The CET1 ratio indicates the capital strength of a bank.
Following the merger, the new banking scheme will proceed with a full operational upgrade with the aim of drastically reducing operating costs and eliminating any additional activities that the two banks had until yesterday to achieve economies of scale.
This restructuring and drastic reduction in operating costs will result from the massive voluntary exits and redundancies of staff respectively and from the drastic reduction of non-performing loans.
