Unicaja begins merger talks with Liberbank

Bloomberg

Unicaja Banco SA and Liberbank SA said they have held talks on rekindling a merger abandoned last year as consolidation gathers pace across Europe’s financial industry.
Unicaja “confirms preliminary contact with Liberbank, with the knowledge of the board and without for the moment, the participation of external advisers,” the lender said in a regulatory filing. It said no final decision has been taken. Its rival also confirmed the discussions.
Bloomberg reported on October 3 that Malaga-based Unicaja is moving closer to a long-mooted takeover of its Spanish rival in a deal that would create the country’s seventh-biggest bank. Talks between the two lenders collapsed last year after five months of negotiations, partly due to differences over the shareholding structure.
Consolidation is heating up in Europe — and especially Spain — as lenders seek to restore profitability hit by negative interest rates and slow economic growth. El Confidencial reported that Banco de Sabadell SA has been in contact with BBVA and Kutxabank on a potential tie up, while CaixaBank SA recently agreed to take over rival Bankia.
Unicaja rises as much as 15.5% while Liberbank gained as much as 20.7% in early Madrid trading on Monday, raising the banks’ respective market capitalizations to 1.2 billion euros and 814 million euros.
Sabadell has been working with Goldman Sachs Group Inc. in recent months on options including a sale or merger, asset disposals or buying a smaller competitor, people with knowledge of the matter said last month.
Previous negotiations between Unicaja and Liberbank stalled last year with the banks unable to agree on how to divide the ownership of the bank. Unicaja, the larger of the two, had pushed for 60% while Liberbank wanted 42%. Shareholders representing both banks agreed on a new structure late last year, a person with knowledge of the matter said at the time.
Shareholders at Liberbank include its founding savings banks as well as Corporacion Masaveu, Mexican investor Ernesto Tinajero and London-based fund manager Oceanwood Capital Management LLP. Unicaja’s main shareholder is the Fundacion Bancaria Unicaja, which owns 49.7% of the bank.
Another key concern was the insistence by the European Central Bank that the two lenders would have to raise capital. Since then both lenders have built up their solvency buffers and regulators have indicated that they will take a more accommodating stance on such roadblocks to help push deals over the line.