Spanish Bank Deal Brews to Create a Regional Powerhouse

Christel Deskins

(Bloomberg) — CaixaBank SA’s potential acquisition of Bankia SA would create a new powerhouse in Spanish finance, putting pressure on the country’s other three top banks. A takeover, which may be announced within days, would allow the combined company to lead rivals Banco Santander SA and Banco Bilbao Vizcaya Argentaria […]

(Bloomberg) —

CaixaBank SA’s potential acquisition of Bankia SA would create a new powerhouse in Spanish finance, putting pressure on the country’s other three top banks.

A takeover, which may be announced within days, would allow the combined company to lead rivals Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA in the domestic market by almost every measure, with more than 600 billion euros ($715 billion) of assets in Spain. In some key areas, CaixaBank is already No. 1 on its own.

That may prompt rivals to look for ways to catch up. Banco de Sabadell SA, which stands to be left far behind, is working with Goldman Sachs Group Inc. to explore strategies that may include consolidation or selling assets. Here are six charts to show how the combined bank would stack up against its Spanish competitors.



a screenshot of a cell phone: Taking the Lead


© Bloomberg
Taking the Lead

The new bank would also be the Spanish market leader in lending, with a complementary mix of retail and corporate loans. Bankia works mainly in the mortgage industry, while CaixaBank focuses on loans to businesses, which make up more than 40% of its total loan book. At a group level, Santander and BBVA are much larger thanks to their operations outside Spain.



a screenshot of a cell phone: Lending Juggernaut


© Bloomberg
Lending Juggernaut

European banks have been seeking ways to generate new sources of income and cut costs as persistently low interest rates stifle their their ability to generate profit through lending. Bankia was particularly hard hit due to its large share of variable-rate mortgages, but it has made efforts to diversify and increased its fee income in recent years.



a screenshot of a cell phone: It's Not All Loans


© Bloomberg
It’s Not All Loans

Spanish banks have spent much of the past decade cleaning up their balance sheets following the financial crisis. CaixaBank and Bankia have been particularly successful in reducing their non-performing loans. A merger may also help the two banks improve their balance sheets thanks to gains from an accounting quirk known as badwill. Santander is the outlier in Spain after inheriting a swathe of soured loans with the acquisition of Banco Popular in 2017.



a screenshot of a cell phone: Healthy Loan Book


© Bloomberg
Healthy Loan Book

Still, it won’t be all rosy for the new lender. The combined company would start with a higher cost-to-income ratio than its rivals.



a screenshot of a cell phone: Efficiency Problem


© Bloomberg
Efficiency Problem

CaixaBank has one of the best technology platforms in Spain and should be able to absorb Bankia systems at little cost, according Ricardo Wehrhahn, managing partner at Intral Strategy Execution in Madrid. But the main synergies will be achieved through closing down duplicate branches and reducing staff. With nearly half of Spain’s branches, the potential for cost cuts is enormous. Analysts are forecasting gains of between 450 million euros and 750 million euros a year.



a close up of a logo: Local Presence


© Bloomberg
Local Presence

For more articles like this, please visit us at bloomberg.com

©2020 Bloomberg L.P.

Continue Reading

Source Article

Next Post

Best gadgets of IFA 2020

The coronavirus pandemic might mean that the IFA 2020 tech show, usually held in Berlin every year, is mostly being held as a series of online events, but that doesn’t mean there aren’t as many neat new gadgets being launched. I’ve swapped a German beer for a strong coffee and […]
Best gadgets of IFA 2020

Subscribe US Now

mega sloto

Liga228 Situs web judi bola terpercaya terbesar dan terpercaya di Indonesia.

situs judi bola terbaik dan terbesar di Indonesia saat ini adalah Winning228.

Situs sbobet resmi terpercaya. Daftar situs slot online gacor resmi terbaik. Agen situs judi bola resmi terpercaya. Situs idn poker online resmi. Agen situs idn poker online resmi terpercaya. Situs idn poker terpercaya.

situs idn poker terbesar di Indonesia.

List website idn poker terbaik. Deposit Cuan Slot Paling Murah

Game situs slot online resmi

slot hoki online

slot Indonesia

bocoran rtp slot

judi bola sbobet

Situs BandarQQ Online Terpercaya

??????????????? ???????????????

slot gacor hari ini judi slot online IDN Poker Online hoki slot rtp slot slot online slot online judi bola terpercaya slot online terpercaya prediksi parlay hari ini judi bola Agencuan judi bola online terpercaya dengan varian pilihan tim sepakbola dunia terbaik, jangan lupa pasang taruhan mixparlay uang asli.