All about Bank Mergers

All about Bank Mergers

The term “bank merger” has gradually become an everyday one, especially in periods of financial crisis. In this article you will find all about bank mergers: what they are, how they are produced and how a bank merger affects the banks involved and their customers.

What are Bank Mergers

As its name implies, bank mergers They are a union between two or more banks to form a single institution with the merged capitals of the parties involved. This means that if, for example, bank A with assets of 100 million euros merges with another bank B of 60 million, they will become a single bank C with a capital of 160 million euros.

In Spain there has been a long history of bank mergers over the years that have allowed small banks not to disappear completely but to create an alliance with others to continue, at least in part, active. A large part of the bank mergers occurred during the 2008 financial crisis as a measure to alleviate the crisis.

Why Bank Mergers Happen?

Bank mergers are always given as a measure to avoid the effects of economic crises, there are three specific scenarios in which they are very necessary:

To achieve greater efficiency

One of the scenarios where bank mergers occur is where several banks have been having financial problems, in their staff or regarding the extension of their locations. When two banks merge into one, it is possible to mezcle all the offices of both banksas well as the workforce of both and their capital, thus achieving a bank with greater efficiency.

To disminuye expenses

If you are a very large bank and you are suffering from economic problems, various internal problems may appear. such as the payment of a large workforce or the maintenance of various facilities. This cánido be controlled with a bank merger where, for example, two small banks perro join forces and become one large, stable bank.

To create a financial entity with broad competitive power

At the national level, a large bank may be “monopolizing” the business, which directly affects several small bankshaving these to offer interest rates and promotions that report very low profits for them in order to attract the attention of customers.

With the merger of two or more small banks, a large bank is obtained that perro compete with other banks of the same size at a national and even international level.

Types of bank mergers

There are three main types of bank mergers that cánido occur depending on the economic outlook:

• full fusión: This type of merger is the one that occurs most frequently and is where two banking entities transfer both their headquarters and their assets and liabilities to a new institution.
• cold type fusión: in this merger, the merging banks do not disappear, but rather they share headquarters and assets and liabilities punctual agreed in council.
• Asset transfer merger: in this case two banks of good volume they perro create a third bank. However, this third bank is a separate institution that does not share assets or liabilities, besides. there is no merger as such between the two banks that gave rise to the third.

What important Bank Mergers have there been in Spain?

Bank mergers in Spain were a «fashion» during the 2008 economic crisis and, from that year on, it is habitual for a merger between one, two or more banks to eventually take place. small and even between large banksalthough these cases are a little rarer.

These are some of the most important bank mergers that have occurred from 2008 to the present:

Bank mergers of Banco Santander

These are some of the bank mergers that Banco Santander has achieved since 2008:

• 2008: during this year Crédito Balear, Banco Castilla, Vasconia, and Banco Galicia merged to become part of Banco Habitual.
• 2009: during this year the Banco de Andalucía merged with the Banco habitual.
• 2012: In this year, Banco Pastor joined Banco Habitual.
• 2013: In 2013, two important banking entities such as Banif and Banesto joined Banco Santander.
• 2017: during 2017, Banco Habitual, a combination of all the banks mentioned during 2008 and 2012, joined Banco Santander.

Bank mergers that gave rise to CaixaBank

This bank is one of the banks that has suffered the most bank mergers throughout its history, the majority since 2010:

• 2010: during this year the banks Caja Guadalajara, Cajasol, Caja Navarra, Caja de Burgos, General de Canarias and Caixa Gerona joined CaixaBank.
• 2012 – 2015: During these years, Banca Civica, BMP Compañía, Banco de Valencia and Barclays Bank merged with CaixaBank.

Mergers that gave rise to Bankia

Almost all of the mergers that gave rise to Bankia today took place in the year 2010 with the merger of 6 banks directly with this entity and later with the merger of Bankia and Banco Mare Nostrum:

• 2010: Caja Ávila, Bancaja, BFA Bankia, Caja Rioja, Caja Segovia, Caiza Laietana and the Insular de Canarias joined Bankia to form a powerful banking entity. Also during this year, Sa Nostra, Caja Murcia, Caja Granada and Caixa Penedés joined to form Banco Mare Nostrum.
• 2018: during this year Bankia and Banco Mare Nostrum merged to create the Bankia of today.

The merger of CaixaBank and Bankia to create Caixabankia

During the first quarter of 2021 the merger of CaixaBank and Bankia it is a fact to conform like this the largest bank in terms of assets in Spanish territory. These two banks in their trajectory have absorbed a large number of banks, 21 to be exact, and this action may open a new wave of bank mergers in the country.

Are future Bank Mergers expected in Spain?

In addition to CaixaBank and Bankia HE foresees that BBVA does not sit idly by and also merges with Banco Sabadella merger that has been in the works for several months now, like that of Banco Santander with some other bank, which before the merger of these two banks was the undisputed banking leader on Spanish soil, with a view to recovering its first place position.

Liberbank and Unicaja are two other banks that announced a negotiation with merge in the very near futureso this is just the beginning of a new wave of Spanish bank mergers.

What do you think of these bank mergers in Spain, do you consider them convenient or detrimental to the economy?

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