Keiza Bank and Bankia together form Spain’s largest bank

Boards of Spain’s Keiza Bank and state – owned Bankia have approved a merger plan between the two lenders, which will create the country’s largest bank with market share in retail operations.

Under the terms of the agreement, Keiza Bank will issue 0.6845 shares per bank, according to a statement issued on Friday. The companies say the newly formed lender, which owns the Keiza Bank brand, will have assets of more than 4 664 billion ($ 786.7 billion).

The merger plan is yet to be approved at public shareholder meetings of the two companies And by competition officials. Banks expect the process to be completed in the first quarter of 2021.

“Through this process, we will become a leading Spanish bank at a time when it is more important than ever to create a significant number of companies, thus contributing to the needs of families and companies and strengthening the strength of the financial system,” said Bankia Managing Director Jose Ignacio Gorigolsari in a statement.

The new company will be chaired by Goyrikolsari and will be headed by Gonzalo Corteser, the current CEO of Geizbank.

European lenders are under significant pressure in the wake of the global financial crisis and the subsequent extreme loosening monetary policy. In addition, the shock created by the corona virus infection earlier this year exacerbated their problems and integration would be a solution to reduce costs and make the business more profitable.

“Keiza Bank and Bankia’s solid stock level restructuring costs and the ability to absorb changes in the valuation, the combined company achieves a CED1 ratio of 11.6%,” the banks said in a statement.

The meticulously observed CED1 ratio is a measure of the strength of capital introduced following the global financial crisis.