MADRID, March 15 (Reuters) - Spain's bank bailout fund, the Frob, told nationalised lenders Bankia and Banco Mare Nostrum (BMN) on Wednesday to begin a process to merge the two banks, the best option to recover public cash used to bail them out.
The fund said in a statement to the market regulator that studies have valued the state's 65 percent stake in BMN at 690 million euros ($733.1 million). The Spanish government also holds a 65.5 percent stake in Bankia.
The merger of the two lenders would bring Spanish coffers 401 million euros more than the individual sale of each bank, the Frob said.
In separate statements, both banks said they would look at the proposal though the final decision to begin the merger must be taken by their respective boards. ($1 = 0.9412 euros) (Reporting by Jose Elias Rodriguez; Writing by Paul Day)