Spain pushes for Bankia and CaixaBank merger
The Spanish government is pushing for a merger between CaixaBank and Bankia.
Sales negotiations could be needed in Spain as the country's government is pushing for a merger between Bankia and CaixaBank.
Reuters reports this is because ministers intend to improve the outcome of the struggling financial sector without using any public funds.
Therefore, merging the two savings banks - the third and forth largest in the country - would speed up the consolidation in the industry, with this move seen as the only viable opportunity the nation has.
However, Spain will struggle to succeed due to high costs of the state providing guarantees for the tie-up, as banking and political sources told the publication there are few funds available to help the firms lose toxic real estate assets.
Rescuing the industry in the same manner Ireland did is not viewed as a solution, as this would raise the nation's debt and sour sentiment within the eurozone.
Other mergers and acquisitions within Europe's banking sector include the recent purchase of Northern Rock by Virgin Money.
Posted by Ken Hayes
Source: Reuters, January 18th