Large Mergers Could Be Signs of Gloom – Lee Chandler

Spanish banks: CaixaBank and Bankia have announced a merger in which CaixaBank will acquire Bankia in a deal to ease profit losses due to the coronavirus pandemic. Bankia has had a troubled past, like when it was bailed out by the government during Spain’s 2012 banking crisis at $5.1 billion. This new merger will make it the largest bank within Spain’s domestic market. Bankia’s current chairman, Jose Ignacio had stated that “we will become the leading Spanish bank at a time when it is more necessary than ever to create entities with significant size.” Ignacio is slated to become the new entity’s chairman as well. 

So, what does this mean exactly? With the new banking entity having a combined customer base of 20 million along with 25% of all loans and deposits in Spain and assets totaling $786.6 billion; it is hard to read this and not be afraid. With Europe’s buzzing circus of banks shacking up with one another to avoid failure. We as savers and investors cannot sit and wait while Europe’s banking market decides to create institutions too big to fail. With the coronavirus recession looming in the horizon, it is worrisome to see firms react negatively to the economic environment by attempting to consolidate risk into larger entities. 

 

https://www.cnn.com/2020/09/18/business/caixabank-bankia-merger/index.html

 

 

Anthony Kardous

https://www.linkedin.com/in/anthonykardous/

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