Caixabank has offered to buy Banca Cívica for €980m in shares, an 11 per cent discount to its smaller rival’s market value, in a deal which will create Spain’s largest domestic bank by assets.

The boards of the four cajas that control Cívica were meeting on Monday night to decide whether to approve the offer, people familiar with the talks said.

In an ominous signal for shareholders in Spain’s smaller banks, which are in a process of rapid consolidation as they struggle with mounting property losses, Caixabank, the listed arm of La Caixa, the Catalan savings bank, made the discounted offer of €1.97 a share after conducting due diligence.

The all-share offer by Caixabank, which will have €340bn worth of assets after absorbing €72bn from Cívica, was set at an 11 per cent discount to its closing price on Friday, and crystallises a 27 per cent loss for investors in the smaller banks’ stock market listing last year.

Cívica, formed out of a merger of the privately held savings banks of Navarra, Burgos, western Andalusia and the Canaries, surprised some observers last summer by managing to sell its shares to investors at a time when few other companies had been able to float in Europe.

The possible Caxia-Cívica merger is the latest move to restructure Spain’s banking sector, which is troubled by bad loans made during the country’s property bubble, and branch overcapacity, with two-thirds of the 45 savings banks, or cajas, that were in existence before the crisis now gone.

Caixabank, which before its shares were suspended on Monday as a result of the talks with Cívica, was valued at €12.08bn, had been reluctant to pay a premium for the bank as the deal is not eligible for a state-organised asset protection scheme, as had been other recent mergers.

Earlier this month BBVA purchased the caja Unnim for a token price of €1, alongside an asset protection scheme that would guarantee losses of up to 80 per cent for 10 years, while Unicaja took over the banking operations of Caja España-Caja Duero.

Late last year Banco Sabadell paid a euro to buy CAM, the Alicante-based caja seized by the Bank of Spain, in return for another asset protection scheme.

Spain’s conservative government earlier this year forced lenders to set aside a headline figure of €50bn in new provisions as the sector’s bad loan ratio continues to rise, hitting 7.9 per cent of risk weighted assets in January, or the highest since Spain’s last large real estate crisis in 1994, according to the Bank of Spain.

Miles Johnson and
Victor Mallet

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