The Spanish Bankia climbs in the stock Exchange after the takeover of Banco Mare Nostrum

The bank consolidation continues in Spain. The public bank Bankia announced on Tuesday the repurchase of the small Banco Mare Nostrum (MNB) via a stock swap valuing the latter about eur 825 million.

The operation “is very positive for the taxpayers, because the union of the two entities increases the capacity (Bankia) to reimburse the aid received,” explains the chairman of Bankia, José Ignacio Goirigolzarri, quoted in a press release.

The transaction will be carried out on the basis of an action Bankia 7.8 shares of MNB. It is expected to be completed by the end of 2017, said Bankia in a document sent to the Spanish authorities in the financial markets.

The Madrid stock Exchange greeted the announcement on Tuesday, with a title Bankia increased by 4.02% 4,19 euros, to 13h03.

Preparation for the privatization

This occurs in a context of consolidation of the banking sector in Spain, where the number of establishments has increased from 55 in 2008 to 13 now in the wake of the bursting of a housing bubble that plunged the country into the economic recession at the end of the first decade of 2000.

The objective of the operation is to make Bankia more attractive in the eyes of investors in view of its planned privatisation later than the end of 2019 by the Spanish government, which hoped to recover the most money possible. The redemption of the MNB, based in the south and the Balearic islands, “allows us to complement our positions in the territories, which are very dynamic in which we had a very limited presence”, points out José Ignacio Goirigolzarri. The State, already the majority in the capital of the two banks, will control approximately 66.5% of the new entity.

[Perimeter pro forma of Bankia after merging with Banco Mare Nostrum, gross loans and deposits € billion, number of customers in millions and the number of agencies]

Bankia was born out of the merger at the end of 2010 seven savings banks squeezed by the collapse of the Spanish real estate market. Fourth bank in the country, a symbol of the crisis that rocked the banking sector, it had been saved narrowly from bankruptcy by nationalisation in 2012, absorbing more than 22 billion euros of public subsidies, half of the european plan to rescue spain’s banks. For its part, MNB is a small bank from the old savings bank regional Caja Murcia, who had also had to be nationalised

Wave of bailouts

This merger, which was authorized by Madrid in march, comes at a time when Southern Europe is experiencing a new wave of bailouts. The Italian government announced on Sunday the public rescue of two banks in the venetian in difficulty to a maximum of 17 billion euros, while the bank Monte Paschi di Siena is expected to soon be bailed out and partially nationalized.

In Spain, the rescue in early June of Banco Popular, on the brink of bankruptcy, was done without public money. The property has been redeemed in extremis by his compatriot Banco Santander for a euro, when triggered by the european central Bank (ECB) of a new mechanism of rescue of banks.

(with AFP and Reuters)

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