Spain’s bank bailout fund gives green light to Bankia and Banco Mare Nostrum (BMN) on Wednesday to begin a merger process.
Merger process is the best shot for the Spanish government to be able to recover public aid by Spain’s badly hit banks. Both banks were bailed out with almost €24 billion of public money in 2013.
The vast majority, €22 billion euros went to Bankia, after losing €19 billion euros in 2012 due to red loans of the real estate market, while the rest €1.6 billion went to BMN.
Fund for Orderly Bank Restructuring (Frob), Spain’s a banking bailout and reconstruction program initiated by the Spanish government in June 2009, concluded that “the merger of Bankia and BMN is the best strategy to optimise the recovery of public aid,” based on analysis and studies by AFI and Societe Generale.
Frob estimates that the two banks merger would bring €401 million more than the individual sale of each bank, valuing Spanish state’s 65% stake in BMN at €690 million. The Spanish government also holds a 65.5% stake in Bankia.
Commission: “It is up to the Spanish authorities to ensure transaction is in line with commitments”
Asked by reporters on Wednesday, the European Commission Competition spokesperson Ricardo Cardoso stressed that “it is the responsibility of the Spanish authorities to ensure that plan transaction is in line with the banks commitments, both for Bankia and BMN under the Commission’s state aid decisions.”
“We don’t have a comment for the merger per se, but we continue to monitor the implementation of the commitments and we continue being in contact with the Spanish authorities,” concluded the Berlaymont spokesperson.