Bankia shareholders have given the go-ahead to Bankia’s proposed merger-takeover by Spanish lender CaixaBank.

The merger creates a new bank under the name of CaixaBank, which will serve more than 20 million customers in Spain.

The latest development comes after CaixaBank agreed to buy its state-owned rival Bankia valuing the business at €3.8bn ($4.5bn), in September 2020.

Deal terms

Under the agreed terms, Bankia investors will receive 0.6845 shares in CaixaBank for each share held.

This represents a 20% premium over the exchange ratio as of 3 September 2020, before the banks were exploring a merger.

In total, investors will receive 2,079,209,002 CaixaBank ordinary shares in exchange.

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CaixaBank shareholders will own a 74.2% stake in the new business, while Bankia shareholders will own 25.8%.

La Caixa Banking Foundation’s fully-owned entity CriteriaCaixa will be the biggest shareholder in the new group with a nearly 30% stake.

The Spanish government-owned Fund for Orderly Bank Restructuring (FROB), which is already a majority shareholder in Bankia, will hold a 16.1% stake.

The remaining 54% shareholding will comprise institutional investors (37%) and retail investors (17%).

Subject to the receipt of regulatory approvals, the transaction is expected to close in the first quarter of 2021.

Synergies

The combined bank, which will be the biggest bank in Spain, will have €660bn ($795bn) in total assets and a market cap of over €16bn ($19.2bn).

It will have a 25% market share in loans and 24% in deposits and 29% in long-term savings, which includes savings insurance, mutual funds, and pension plans.

Bankia said that the new entity is expected to bring value for customers, improve returns for shareholders, and support Spain’s economic recovery.

The business is expected to generate annual revenue synergies of €290m in a period of five years, up to €770m in cost savings per year, and improve the proforma cost-income ratio.

Additionally, the synergies will boost returns with an estimated return on tangible equity (RoTE) of above 8% in 2022.

The business combination will give the new bank a CET1 ratio of 11.6%.

Comment

Bankia chairman Jose Ignacio Goirigolzarri said: “The repercussions of Covid-19 and the foreseeable long-term continuation of negative interest rates means that we should find a partner to accompany us on the path we will travel in the coming years.

“We will now be accompanied by the best travel partner we could have for starting out on this new stage: CaixaBank.

“Today we are faced with great uncertainties about what the future will bring, but what we can be certain of is that, as part of the new bank spawned by the merger of Bankia and CaixaBank, that future will be better than what each of our banks could achieve separately.

“We are embarking on a tremendously exciting project, one which fills us with pride and with responsibility as well. And in shouldering that great responsibility we can count on the experience and enthusiasm of two great teams.”