SPAIN’S STATE-OWNED Bankia agreed on Tuesday to acquire Banco Mare Nostrum (BMN).
The acquisition with create Spain’s fourth-biggest lender amid consolidation in Europe’s struggling banking sector.
The new bank will hold around €223 billion euros worth of assets, Bankia said in a statement.
The two nationalised banks – both formed from the merger of several failed lenders – were bailed out at the height of the financial crisis with around €24 billion of public money after major losses on property loans.
Spain’s Fund for Orderly Bank Restructuring (FROB) manages the restructuring and resolution processes of credit institutions and said the Bankia deal would be regarded as ‘a way to recover public funds before a future divestment process.’
The state holds around 67 per cent of Bankia and 65 per cent of the smaller BMN.
After the acquisiton, the FROB is expected to hold around 66.6 per cent of the new bank.
‘It was the right timing from a macroeconomic point of view due to the strengths of the Spanish economy and also due to the pace of the current reduction of the unemployment rate,’ Bankia Chief Executive Jose Sevilla is reported to have told analysts on a conference call.
The lenders agreed to a 7.8-for-1 share swap deal, valuing BMN at around €825 million.
Bankia shares rose four per cent on Tuesday.
In a statement to The National Securities Market Commission (CNMV) , Bankia said it would issue a maximum of 205.7 million new shares to help finance the deal, which is expected to be finalised by the end of this year.
After years of consolidation, the number of lenders in Spain has shrunk from 55 in 2008 to 13 after the housing market bubble burst, triggering an almost five-year economic slump.