Research Update: Spain-Based CaixaBank Affirmed As Merger With Bankia Announced; Bankia Placed On CreditWatch Positive

On Sept. 17, 2020, Spain's CaixaBank S.A. and Bankia S.A.'s boards agreed an all-share merger that they expect will close in the first quarter of 2021. Upon completion, Bankia is to be absorbed by CaixaBank; all of its assets and liabilities will be transferred to the acquiring entity. The deal will create by far the largest domestic bank in Spain. It will reinforce CaixaBank's domestic position, giving it nearly 25% of the market in loans and deposits. In the long term, we think this may help the enlarged CaixaBank to alleviate its structurally low profitability. CaixaBank's financial strength should be sufficient to cushion the effect of the acquisition on its credit profile. We are therefore placing our long-term rating on

...- On Sept. 17, 2020, Spain's CaixaBank S.A. and Bankia S.A.'s boards agreed an all-share merger that they expect will close in the first quarter of 2021. Upon completion, Bankia is to be absorbed by CaixaBank; all of its assets and liabilities will be transferred to the acquiring entity. - The deal will create by far the largest domestic bank in Spain. It will reinforce CaixaBank's domestic position, giving it nearly 25% of the market in loans and deposits. In the long term, we think this may help the enlarged CaixaBank to alleviate its structurally low profitability. CaixaBank's financial strength should be sufficient to cushion the effect of the acquisition on its credit profile. - We are therefore placing our long-term rating on Bankia, and our ratings on its nonoperating holding company (NOHC) BFA Tenedora de Acciones, S.A.U., on CreditWatch with positive implications. - We are also affirming our ratings on CaixaBank and its highly strategic subsidiary Banco BPI S.A. The stable outlooks...

Research Update