Banca Cívica agrees to takeover by Caixabank

The top management of Banca Cívica on Friday reached an in-principle accord for the Spanish bank to be taken over by its rival Caixabank.

Caixabank will absorb Banca Cívica via a share swap, the terms of which are still being worked out. The exchange, however, will be based on a valuation above Banca Cívica’s closing share price on Friday. Banca Cívica’s shares closed down 6.33 percent at 2.22 euros on concerns the offer could be below market price.

“The price will be tight,” sources close to the operation told EL PAÍS on Thursday. “At the moment, all financial institutions are trading at low prices; below their book value.”

Market analysts said the reference for valuing Banca Cívica will be BBVA’s acquisition of Unnim earlier this month from the state Orderly Bank Restructuring Fund (FROB) for a nominal amount of one euro.

Caixabank will not be entitled to any external assistance in the purchase of Banca Cívica and will have to foot the bill for restructuring, with an estimated 10 percent of the combined group’s 6,600 offices and 32,500 employees surplus to requirement.

Banca Cívica, the amalgam of savings banks CajaSol, Caja Navarra, CajaCanarias and Caja de Burgos that listed last year, needs to link up with stronger rival Caixabank in order to meet new provisioning requirements for banks’ exposure to the real estate sector. It needs 2.031 billion euros to do so.