May 14, 2019 / 6:01 PM / 7 months ago

Liberbank and Unicaja call off talks to form Spain's 6th biggest bank

MADRID, May 14 (Reuters) - Spain’s Liberbank and Unicaja called off merger talks on Tuesday after the former savings banks said they could not reach a deal over the terms of a share swap.

A tie-up between Unicaja and Liberbank would have created Spain’s sixth-biggest bank with 97 billion euros ($108 billion) in assets and last week, the deputy governor of the Bank of Spain Margarita Delgado said mergers were a clear way to improve profitability and efficiency in the sector.

“The parties have not reached a agreement on the possible share swap, so the board of Unicaja Banco unanimously decided to end the negotiations,” Unicaja Banco said in a similar statement to one issued by Liberbank.

The banks did not give any details about the disagreement.

As part of a potential deal, Unicaja, which has 56.4 billion euros in total assets as of end-March, was seen taking a bigger stake in the combined entity and closer to 60 percent, according to analysts, whereas Liberbank, with 40.6 billion euros in assets, was regarded as the smaller partner.

Since the outbreak of the financial crisis in 2008, the number of Spanish lenders has shrunk to 12 from more than 55 and their plan was seen as the next step in this consolidation.

Although both lenders said they remained committed to pursuing their financial targets and creating value for their shareholders, banks in Spain are under pressure as low interest rates are eroding their financial margins.

Spain’s Abanca, with 50 billion euros in assets, had also approached Liberbank in February about a takeover, but finally dropped its potential bid after it was unable to carry out due diligence.

Bank of America Merrill Lynch, financial adviser to Abanca in the potential deal with Liberbank, last week disclosed a 7.8% stake in Liberbank, raising speculation of renewed interest.

Abanca declined to comment on Tuesday. (Reporting by Jesús Aguado; Editing by Alexander Smith)

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