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CaixaBank and Bankia received approval from their boards to merge, creating a bank worth more than $786 billion on Friday. CaixaBank will exchange 0.6845 of its shares for one Bankia share. The new bank will operate under CaixaBank's brand and will have more 20 million customers. Visit Business Insider's homepage for more stories.
CaixaBank and Spanish-state owned Bankia said on Friday they had got the greenlight from their boards to merge, creating the country's largest domestic bank. The deal will create a bank with assets of more than $786 billion. CaixaBank will exchange 0.6845 of its shares for one share in Bankia. The operation is expected to close in the first quarter of 2021, as the merger still needs to be approved by both banks' shareholders, as well as various regulatory and competition authorities. "The combined entity's total assets will exceed 664 billion euros, a volume that will make it the largest bank in the domestic market, with an important position at a European level and a market capitalization of over 16 billion euros," the banks said in a joint statement. Read more: 3 top investing executives lay out the biggest risks to markets heading into a volatile election season — and share their best recommendations for navigating what happens next The new bank that will operate under the CaixaBank brand increases the group's retail banking exposure and will have more than 20 million customers. "With this operation, we will become the leading Spanish bank at a time when it is more necessary than ever to create entities with a significant size, thus contributing to supporting the needs of families and companies, and to reinforcing the strength of the financial system," Bankia chairman José Ignacio Goirigolzarri said. Goirigolzarri will become executive chairman of the combined bank, while CaixaBank CEO Gonzalo Gortázar will become CEO of the newly created entity. Read more: Goldman Sachs says oil prices are set to move 'meaningfully higher' into next year. Here are 7 reasons why the firm is bullish, and 5 stocks it recommends buying in advance "The merger will allow us to face the challenges of the next 10 years with greater scale, financial strength and profitability, resulting in greater value for our shareholders, more opportunities for our employees, better service to our clients and a greater capacity to support Spain's economic recovery," Gortázar said. Banks across Europe are grappling with low interest-rate environment and the impact of COVID-19. Bankia is often compared with Lehman Brothers, the US investment bank whose collapse in late 2008 unleashed the financial crisis. Bankia was Spain's biggest mortgage lender until the euro zone debt crisis in 2012 pulverized the country's banking sector, triggering a a 22.4 billion euros ($26.6 billion) state bailout. As of 05:30 am. ET, CaixaBank's shares were up 0.6% at 2.06 euros ($2.5) and Bankia's shares were down 2.2% at 1.4 euros ($1.7). Join the conversation about this story » NOW WATCH: What makes 'Parasite' so shocking is the twist that happens in a 10-minute sequence
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