MADRID (Reuters) – Spain’s CNMC competition watchdog on Tuesday approved Caixabank’s acquisition of state-owned lender Bankia, though the merged entity will have to agree to a number of conditions in its retail banking arm.
Caixabank agreed to buy Bankia in September for 4.3 billion euros ($5.2 billion) to create Spain’s biggest domestic bank with more than 650 billion euros in assets.
The new entity will not have to divest any of its businesses, the CNMC said.
However, it said an analysis of the combined company’s retail banking business found there would be a lack of competition in 86 postal codes across Spain, and Caixabank would command an effective monopoly in 21 of them.
Among other concessions, Caixabank must guarantee the same terms and conditions to existing Bankia customers in those areas for three years.
To mitigate any risk of financial exclusion it also cannot close offices without the CNMC’s authorisation in any area where it is the only lender.
There we no concerns in other business areas such as investment or corporate banking, the CNMC said.
The deal, which is expected to close by the end of the first quarter, also needs a green light from the economy ministry after being reviewed by Spanish and European supervisors.
Shareholders of both lenders gave their blessing in December to the transaction, which is underpinned by annual cost savings of 770 million euros. The market value of the combined business is more than 16 billion euros.
The banks have said the combined entity would have 51,500 employees and 6,300 branches in Spain. They have not given any details of potential staff reductions or branch closures.
($1 = 0.8435 euros)
Reporting by Jesús Aguado; Additional reporting by Nathan Allen; Editing by Andrei Khalip and Mark Potter