MADRID (Reuters) – Spain’s Prime Minister Pedro Sanchez on Monday said there were positive aspects in the proposed merger of Spanish lenders Caixabank
“From the perspective of size, the Spanish financial sector has to take steps forward,” Sanchez said in an interview on TVE.
The two lenders are set to agree a merger to create Spain’s biggest domestic lender in the coming days, two sources told Reuters on Friday, in a deal expected to lead to hefty job cuts and possibly kick off a new wave of industry consolidation..
Since the end of the 2008 financial crisis, the number of major lenders in Spain has dropped to 12 from 55 but regulators see more scope for mergers as a way to cut costs.
The deal could also reignite tensions within the Socialist-led coalition government as the left-wing Unidas Podemos has in the past floated the idea that Bankia should remain state-controlled to better serve the interests of taxpayers.
On Monday, Sanchez said that for him a publicly controlled bank would be the state agency Instituto de Credito Oficial (ICO), through which the state has been backing the sector with more than 140 billion euros ($165.8 billion) in guaranteed funding lines.
He also said that the deal was made public when Bankia and Caixabank decided to initiate negotiations.
The all-share deal is still being finalised, but based on Thursday’s market capitalization and before the deal was announced the state’s 61.8% stake in Bankia could fall to around 14% of the new entity, while Caixabank’s foundation, its main shareholder, would have around 30%, the sources said.
Sanchez reiterated on Monday that the government’s aim was to maximize the value of the state’s stake in Bankia.
Bankia was bailed out in a 22.4 billion euro state rescue in 2012, at the height of Spain’s financial crisis, and so far it has returned only 3.3 billion euros of the state aid.
(Reporting by Inti Landauro and Beln Carreo; Writing by Emma Pinedo and Jess Aguado; editing by Emelia Sithole-Matarise)
