MADRID (Reuters) – Caixabank has agreed to buy Bankia for 4.3 billion euros ($5.1 billion) in an all-share deal that creates Spain’s biggest domestic lender and signals a pick up in mergers among Europe’s banks as they battle the fallout from the COVID-19 pandemic.
The merger will create the largest domestic bank by assets with a combined market value of more than 16 billion euros ($19 billion), in a deal underpinned by annual cost savings of 770 million euros, the companies said on Friday.
European banks are under growing pressure to join forces to deal with rising bad debts and record-low interest rates. Italy’s Intesa Sanpaolo is taking over Unione di Banche Italiane, and Spain’s Sabadell has also held informal talks about a possible tie-up.
Bankia BKIA.MC chairman Jose Ignacio Goirigolzarri told analysts the deal had been done in anticipation of a “more complex environment” triggered by the pandemic.