Spain's Bankia swallows Banco Mare Nostrum in €825m deal

 
Oliver Gill
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Bankia chairman Jose Ignacio Goirigolzarr said the deal was good for both shareholders and the government (Source: Getty)

Spain's fourth largest lender Bankia has agreed a €825m (£730m) deal to swallow up smaller rival Banco Mare Nostrum.

In a statement this morning, Bankia said it will issue 205.6m new shares to Banco Mare Nostrum (BMN) shareholders and "carry out a merger by absorption".

Bankia is on the other side of a painful restructuring and chairman Jose Ignacio Goirigolzarri said the lender "was ready to embark on a new stage of growth".

Read more: Investors wary of Spanish banks following Banco Popular flop

He added: "The integration of BMN is tremendously positive because it allows us to build out our franchise in some areas of strong growth in which we had a very limited presence."

Bankia expects today's deal, set to be rubber-stamped by regulators later this year, to increase earnings per share by 16 percent after three years.

"The merger is very good for all of Bankia's shareholders because of the value creation it entails," added Goirigolzarri.

And it is very good news for the taxpayers because the union of the two institutions increases the capacity to repay the aid received.

BMN chairman Carlos Egea said: "The merger is good for our shareholders, employees and customers, as BMN will be joining the country's fourth largest financial group, which is also its most solvent, most efficient and most profitable".

Read more: Santander to take over Spain's Banco Popular

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