The executive chairman of Bankia has raised the prospect of further consolidation in the Spanish banking market by saying the majority state-owned bank would be “the perfect fit” with its main domestic rivals.
The Spanish government has committed to sell its entire 60 per cent stake in Bankia by end 2019.
“We are a good combination for everybody,” said José Ignacio Goirigolzarri, who took charge after its taxpayer bailout six years ago.
Bankia’s market capitalisation of almost €12bn would make a deal the biggest banking acquisition since the financial crisis. After Santander’s acquisition of stricken Banco Popular last year, most Spanish bankers and analysts think the only rivals with the appetite and firepower for a Bankia buyout are BBVA and CaixaBank.
Mr Goirigolzarri said the Spanish government was in a “very tricky” position. “The market is of course expecting that you are going to sell a stake in Bankia, so the problem with that is you have an overhang, a permanent overhang [on Bankia’s share price],” he said.
He hopes the government will sell some shares this year and said that the bank “could be” an acquisition target for a large domestic rival. For now, Bankia is planning for an independent future.
“We have the strategic plan, we have the critical mass and I think Bankia can go ahead in a standalone basis,” Mr Goirigolzarri said.
Formed in 2010 from the merger of seven savings banks, Bankia became the poster child of Spain’s financial crisis after revealing a vast capital shortfall in 2012 that forced Madrid to inject €22.4bn as part of an EU bailout of its banking system.
Amount Bankia vowed to return to shareholders in dividends and share buybacks by 2020
The government sold €818m of Bankia shares in December, after a €1.3bn stake sale in 2014. Its remaining stake is worth less than half what the government paid for it.
Mr Goirigolzarri said Bankia’s lack of presence in the Catalonia region combined with its strong presence on the rest of the Mediterranean coast made it a good match for rivals, particularly BBVA, where he and several top executives previously worked.
However, analysts expressed doubts about the practicality of such a deal, since it would involve a large capital call from BBVA, or would leave BBVA part-owned by the state if it decided to pay for Bankia using BBVA shares.
“The new management have done a good job in terms of operational efficiency,” said Stefan Nedialkov, banks analyst at Citi. “You could argue that an acquirer bank would be able to cut branches in Madrid, Andalucia, Valencia, but there is not really that much that can be improved on in the underlying efficiency of Bankia standalone.”
He added that Bankia was “a 60 per cent mortgage bank” and “we’re not really looking for massive mortgage growth in Spain going forward”. Bankia is aiming to grow SME and corporate lending by around 8 per cent a year, other lenders are also looking to grow business lending aggressively, sparking fears that margins will fall.
Last month BBVA chairman Francisco González played down the chances of his bank doing a deal, saying: “In principle, we’re not interested in physical banks . . . our potential offers are always much more demanding than our competitors”.
Mr Goirigolzarri acknowledged a sale could be “difficult, because if you don’t pay cash you are nationalising yourself”, he said. “That is very tricky in terms of salaries and bonus and so on.”
Bankia cannot pay salaries above €500,000 or bonuses over €250,000 while Madrid still owns a stake in the bank, which the chairman said was “a tremendous mistake” because “you have to be able to attract talent”.
Last week, Bankia promised to return €2.5bn to shareholders in dividends and share buybacks by 2020 under new strategic plan. It aims to cut 2,000 out of 16,000 staff, more than halve its non-performing asset ratio to below 6 per cent of total loans and boost return on equity from 6.7 per cent to 10.8 per cent.
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