No financial details of the deal have been announced so far but on Monday a source with direct knowledge of the merger talks told Reuters that Caixabank would value Bankia at around 4 billion euros.
That’s a premium on the average share price of the past three months but below its current value of 4.24 billion euros after both banks’ share prices have jumped considerably since the merger talks were announced.
At 0912 GMT, shares in Bankia were up 1.5% to 1.4005 euros, while Caixabank down 0.3% down to 2.0110 euros.
Though the number of major lenders in Spain has already dropped to 12 from 55 since the 2008 financial crisis, regulators have been pushing for further concentration of a banking sector which they see as oversized.
Spain is one of the countries with the highest number of branches per 100,000 adults in the world, with 49.66. Italy and France had ratios of 38.79 and 34.27, respectively, while Germany’s ratio was 10.97, according to end-2019 IMF data.
Two sources had told Reuters earlier this week that Caixabank could generate around 8 billion euros in badwill – a paper loss that occurs when an asset is bought below its book value – to help offset restructuring costs and build up provisions. (Reporting by Jesús Aguado Editing by Ingrid Melander and Louise Heavens)