MADRID, March 31 (Reuters) - Shareholders of Spanish lenders Unicaja and Liberbank approved their merger on Wednesday, paving the way for the creation of the country’s fifth biggest bank in terms of assets.
The merger - under the terms of which Unicaja will fully absorb its rival to create a bank with 110 billion euros ($129 billion) in assets - will bring Spain’s number of banks to 10, down from 55 prior to the 2008 economic crisis.
This marks a further acceleration of the sector’s consolidation in Spain after the merger between state-owned Bankia and Caixabank was completed last week to create the largest domestic lender.
The Unicaja-Liberbank deal will allow the combined bank to save 192 million euros annually and reach a capital ratio of 12.4% following 1.2 billion euros of merger-related costs, the banks said.
“The (merged) bank expects to be more profitable and efficient, which will result in higher organic capital generation to finance its growth, and higher recurring dividends,” Liberbank Chief Executive Manuel Menendez told shareholders.
Banks across Europe are struggling to cope with record low interest rates, and the economic downturn sparked by the coronavirus pandemic is forcing a focus on further cost-cuts, including through tie-ups.
Unicaja shareholders approved a total payment of 16.91 million euros against 2020 results, while Liberbank approved 7.86 million, both in accordance with the 15% dividend cap set by the European Central Bank (ECB).
In December the ECB decided to let banks pay out part of their cumulative 2019-2020 profits to shareholders if they have enough capital, easing a blanket ban on dividends and buybacks set during the first wave of the coronavirus crisis.
$1 = 0.8530 euros Reporting by Emma Pinedo; Editing by Ingrid Melander and Jan Harvey