Chitchat Mania

Half Mag / Half Zine

Caixabank CABK.MC and state-owned Bankia BKIA.MC on Friday announced the details of a merger to create Spain’s biggest domestic bank by assets.

Following are some key figures:

FINANCIAL TERMS

  • Caixabank offered 0.6845 shares for every share in Bankia, valuing the state-controlled lender at 4.3 billion euros ($5.10 billion) or 1.41 euros per share.
  • Caixabank CEO Gonzalo Gortazar told analysts there was no need to raise capital to finance the deal.
  • Caixabank said the all-in share deal represents a premium of 20% versus closing prices on Sept. 3 and a premium of 28% over the last three months.
  • Bankia’s valuation at Thursday’s market close was 4.4 billion euros.
  • Shares in both banks jumped after news of the talks first came, giving them a combined market capitalisation of over 16 billion euros.

THE NEW GROUP

  • New lender will leapfrog Santander SAN.MC and BBVA BBVA.MC in Spain, with more than 664 billion euros in total assets, including Caixabank’s assets in its Portuguese unit BPI.
  • The new group will be named Caixabank while Bankia as a commercial brand will be dropped gradually.
  • It will have 51,500 employees in Spain and 6,300 branches, the banks said. Gortazar said talks on how to reduce overlaps will be held with unions once the transaction was closed.
  • It will have more than 20 million customers and a 24% market share in deposits; 25% in loans and 29% in long-term savings products.
  • It will have a non-performing loan ratios of 4.1%.
  • Bankia’s Jose Ignacio Goirigolzarri will serve as executive chairman, but with limited powers.
  • Caixabank CEO Gortazar will be chief executive.
  • The legal headquarters will be in Valencia, while maintaining operating headquarters in Madrid and Barcelona.

GOALS AND COST SAVINGS

  • The banks estimate the new group’s return on tangible equity ratio (ROTE) at more than 8% in 2022.
  • They said they expected to achieve a fully loaded core Tier-1 ratio of around 11.3% in the first quarter after the transaction.
  • Caixabank and Bankia aim to generate annual recurring cost savings of 770 million euros by 2023 and generate revenue synergies amounting to 290 million euros annually over a period of five years.
  • Expected restructuring costs are 2.2 billion euros, which Caixabank intends to fully offset with a bad will, which occurs when an asset is brought below book value.
  • Gortazar also said there was no doubt the deal will lead to higher dividends.

SHAREHOLDER STRUCTURE

  • Caixabank will hold 74.2% of the new bank, while Bankia will have 25.8%.
  • The foundation of La Caixa, through Criteria, the parent company of Caixabank, will own around 30% of the new lender. Before the merger, the foundation had 40% stake in Caixabank.
  • Spain, via state bailout-fund FROB, will hold 16.1% in the combined lender, having held 61.8% in Bankia previously.
  • Shareholders meetings at Caixabank and Bankia will be held in November to legally approve the deal, which lenders aim to close by the first quarter of 2021.