CaixaBank finalizes its merger and Sabadell advances only with a new direction

After 2020 marked by the coronavirus crisis, Catalan banks are facing the new year with important changes, in which CaixaBank will complete its merger with Bankia, creating the largest bank in the country, and Sabadell, after breaking negotiations with BBVA, will continue its solo career under a new management.

Spanish banking started 2020 with good prospects and with a focus on issues such as improving efficiency or digitization, until the pandemic broke out in March and, with it, increased pressures on the sector to move towards consolidation.

CaixaBank took a good note of this, which did not hesitate to step forward to star in the financial transaction of the year: the merger by absorption of Bankito. The third and fifth Spanish banking entities will be integrated to create the first bank in the country, with a volume of assets of more than 600,000 million euros, some 6,000 branches and about 47,000 workers.

The integration, number 85 in the history of CaixaBank, has the approval of the shareholders of both entities and is waiting to obtain the mandatory authorizations from national and European organizations, which will foreseeably take place in the first quarter of 2021.

The new CaixaBank, which will maintain its headquarters in Valencia, it will be chaired by José Ignacio Goirigolzarri, current Chairman of Bankia, while Gonzalo Gortázar, CEO of CaixaBank, will maintain this position.

The still Chairman of CaixaBank, Jordi Gual, will leave the entity, which he arrived at four and a half years ago, convinced that Bankia is the best possible partner and that the operation, one of the great milestones in the bank’s history, will lead to a more solid, efficient and profitable entity.

The ‘yes, I want’ from CaixaBank and Bankia seemed to encourage the consolidation process of the financial sector in Spain and four other entities officially announced their flirtation for a possible merger: Unicaja and Liberbank, on the one hand, and Banco Sabadell and BBVA, on the other.

At the moment, without much success. At the end of November, Sabadell and BBVA, both with long experience in mergers, reported that they were breaking up the integration negotiations for economic disagreements. Their union would have given rise to the second largest financial group in the country, on the heels of the new CaixaBank.

Defying institutional pressure to accelerate financial consolidation in Spain, El Sabadell, with 139 years of history, in which it has grown through acquisitions, both in Spain and abroad, communicated its intention to continue alone and announced the development of a new strategic plan, focused on the domestic market, which will be presented to the market in the first months of 2021.

In the coming months, moreover, César González-Bueno will join the entity as the new CEO to replace Jaime Guardiola, who is retiring after thirteen years in office, and President Josep Oliu will take advantage of this relief to leave his executive functions, following the recommendations of the European Central Bank (ECB).

Will Sabadell be able to face the challenges of the sector, marked by low interest rates, increased delinquencies or low profitability, alone? Some experts believe that, in the long run, the bank of Vallesan origin must seek alliances with other banks.

Some even They do not rule out that Sabadell and BBVA give each other a second chance and resume the merger negotiations. Those who have given themselves another chance have been Liberbank and Unicaja, who have decided this year to re-negotiate their union to create a group with around 100,000 million in assets that would sneak in among the large Spanish banks, surpassing Bankinter.

However, also this merger could derailWhen everything seemed ready to approve the operation, a disagreement on the distribution of power could cause it to fail. The teams of both entities work against the clock to try to overcome the obstacles and be able to reach a pact before the end of 2020.

With more or less mergers, banks are facing 2021 in which we will see more adjustments in staff and offices and in which entities will have to face challenges such as improving profitability, increasing non-performing loans due to the coronavirus crisis or competition of fintech. Analysts predict that the bank concentration process will have to be accelerated to adequately respond to these challenges. Will the banks be there for the work?

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