The shareholders of Bankia have given the go-ahead to the merger with Caixabank. The meeting, held today in Valencia, where the head office is located, has approved the operation to create the largest bank by assets in Spain with around 630,000 million euros. A resulting bank that will maintain its headquarters in the same city and will have two operational headquarters in Barcelona and Madrid, the latter being the main center of the financial firm.
It was more than two months ago when the boards of directors of both entities carried out the union. Then, it was agreed that Caixabank would represent 74.2% of the share capital and Bankia the remaining 25.8%. The La Caixa Foundation, through the Criteria holding, will be the majority shareholder with 30% of the company, followed by 16% who will hold the FROB, that is, the State. It should be remembered, in this sense, that the latter will have a Sunday advisor, Teresa Santero, with a political past in the PSOE governments at the regional level and also in that of José Luis Rodríguez Zapatero at the national level.
José Ignacio Goirigolzarri, Chairman of Bankia, who will also be Chairman of Caixabank with limited functions, has not ignored that the operation, in large part, is due to the pyrrhic profitability of banks in current times. A situation that already dragged on before the Covid, but now even more profound due to the pandemic. “The profitability of European banks is not only very low, but it has been, for several years, below its cost of capital, something that for any sector or company is not sustainable in the medium term», Has pointed out. And among the reasons for this low return, the negative terrain of interest rates has stood out, with “a very negative effect on the banks’ income statements.”
The leader recalled that the merger exchange equation represents a 20% premium for Bankia over the entity’s price the day before the announcement, or 28% taking the average of the previous three months. Furthermore, beyond these figures, he added that «in terms of earnings per share, the combined entity will reach a level of 0.33 cents per share in 2022, which is 28% higher than the level that Caixabank would obtain from independently and almost 70% higher than that obtained by Bankia “. An exercise of “selling” to the shareholders who all benefit from this operation.
However, Goirigolzarri has also recognized that “any integration process carries a certain risk of execution.” “We estimate that we will be able to generate total synergies with the operation for a value of more than 1,000 million euros per year,” he commented. From this figure, 290 million would correspond to increased revenue and another 770 million to cost savings.
The terms of the operation
The deadlines remain the same. Execute the union at the end of the first quarter of next year, and there begin the integration of both systems and technologies, scheduled for the end of 2021. And he recalled the procedures that still need to be passed, beyond Caixabank approving the merger as well this Thursday, December 3 at the shareholders’ meeting: «The final decision is the responsibility of the Ministry of Economic Affairs and Digital Transformation, which in turn will need the prior report, among other organizations, of the Bank of Spain and from European Central Bank, as well as the National Commission of Markets and Competition ”.
What Goirigolzarri did not refer to in his initial speech was the personnel adjustment that the new Caixabank will have to make in 2021. Gonzalo Gortázar, CEO of the resulting entity, already advanced in the presentation of the agreement more than two months ago that they would start negotiations with the unions in the first quarter of next year. They did not give figures regarding how many people they will have to do without, although financial sources emphasize that there will be between 6,000 and 10,000 workers.
Shareholders have asked him about this personnel adjustment. This is when the Chairman of Bankia explained that “as far as possible” the maximum number of employee exits will be sought to be voluntary. A general trend in the sector, which in recent years has led to the dismissal of workers through early retirement and incentivized exits, and not through traumatic dismissals.