New merger of Spanish savings banks a step closer
The boards of Spanish banks Caja Espana-Duero and Unicaja have approved the merger of the two rivals to create what would be the country's third largest union of savings banks, they announced Wednesday.
The two groups had signed a memorandum of understanding on a merger last April as part of a wave of consolidation in the sector as the economic crisis fueled bad loans.
"The Board of Directors of Caja Espana-Duero ... unanimously approved the proposed integration with Unicaja," Caja Espana-Duero said in a statement released to Spain's stock market authority.
"The operation will require final approval of the general assemblies of the two entities, along with the corresponding administrative authorisations."
Unicaja issued a statement late Wednesday saying its board had also approved the deal.
Unicaja will control 70 percent of the resulting entity, both groups said, more than the 63 percent that had been agreed in April.
It will be based in the southern city of Malaga, have a network of more than 1,700 offices, total staff of around 9,000 and assets of some 81 billion euros ($114 billion).
Spain's lenders, especially its regional savings banks which account for about half of all lending in the country, have been heavily exposed to bad debt since the collapse of the property sector at the end of 2008.
The government and Bank of Spain have forced a wave of consolidation in the sector since last year and are requiring banks to quickly increase the proportion of core capital they hold to above international norms.
Caja Espana-Duero is itself the result of the merger last year between Caja Duero and Caja Espana.
The planned new entity would be the third largest union of savings banks in Spain after La Caixa and Bankia.
© 2011 AFP