• Opinion. Two reasons why you should be quite concerned with the Bankia and CaixaBank operation

  • Banking.Bankia and CaixaBank, a strategic merger to survive in a sector that looks into the abyss

The recent announcement of the merger of the Spanish banks Caixabank and Bankia has caused Italy to consider whether to follow this model and merge Monte dei Paschi di Siena (MPS), recapitalized as a precautionary measure in 2017, with another Italian entity to promote "the birth of the third or fourth national bank ".

"The winning model is Spain with the recent merger between Bankia and CaixaBank, under the leadership of the (Pedro) Sánchez government, to create a large Spanish bank. A similar operation could also be carried out in Italy", the president of the parliamentary commission of inquiry on the banking and financial system of Italy and a member of the governmental Movement 5 Stars (M5S), Carla Ruocco, said in an interview with the economic daily "Il Sole 24 Ore".

"We could

strengthen our banking system by stimulating the creation of a third or fourth national bank

. Bankia's situation is very similar to that of MPS in Italy," he said, while encouraging Italy to follow "the example of Spain."

The Italian State is currently the

majority partner of the Tuscan bank with 68% of the capital

, but its intention is to privatize it and exit the capital in 2021, according to the conditions that it negotiated in 2017 with the competition authorities of the European Union (EU) to save her from bankruptcy.

The government's plan is for MPS

to transfer

bad

loans worth

8.1 billion euros

to a "bad bank" that will be managed by the state administrator of this type of loan, AMCO, and sell the "healthy" part to another investor.

"This is not the time to sell a major banking company like MPS, much less to competitors from the EU or outside the EU.

No European country sells its banks to foreign institutions,

" argued Ruocco.

Low interest rates have severely penalized banks in recent years and more recently they are facing the consequences of the crisis stemming from the coronavirus pandemic.

In this sense, MPS currently has a capitalization on the Milan Stock Exchange of only about 1,650 million euros, which would mean that if the State sells its 68% stake at current prices, it would obtain "close to one billion" compared to an investment made. of "almost 8,500 million".

"The profitability for the State would be equivalent to -90%," he lamented.

In his opinion, the

Italian State should go ahead with the assignment of the non-performing loans to AMCO

and then sell the MPS subsidiaries and branches to another entity in the country to create the third or fourth national banking group.

"It is necessary to go to Europe to explain that the sale of MPS does not pursue national interests and creates damage to national public finances. (...) The COVID-19 pandemic has shown that the national banking system is a strategic asset, "he concluded.

The possible merger between CaixaBank and Bankia

would give rise to the first Spanish bank by assets

and would be the largest operation in the sector in the last two decades.

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