Monday, March 26, 2012

Reuters: Deals: La Caixa to buy Civica for $1.3 billion: sources

Posted by Isabella on 12:19 PM

Reuters: Deals
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La Caixa to buy Civica for $1.3 billion: sources
Mar 26th 2012, 18:34

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Workers uncover the new logo of CaixaBank at their headquarters in Barcelona June 30, 2011. REUTERS/Albert Gea

Workers uncover the new logo of CaixaBank at their headquarters in Barcelona June 30, 2011.

Credit: Reuters/Albert Gea

Mon Mar 26, 2012 2:34pm EDT

MADRID (Reuters) - Spain's La Caixa agreed on Monday to the takeover of smaller rival Banca Civica (BCIV.MC) by its listed arm CaixaBank (CABK.MC), said two sources close to the deal.

CaixaBank offered 1.97 euros per share for Banca Civica (BCIV.MC) in an all-share deal valuing the whole of the bank at 980 million euros ($1.46 billion), the sources said.

A second wave of consolidation in the Spanish banking sector is under way as lenders look to raise capital levels to cover losses sustained after a decade-long property and construction bubble collapsed in late 2007.

The combined group would meet easily the tough new capital requirements set by the Spanish government.

If the deal went ahead, newspaper Cinco Dias said CaixaBank would not request state funds for the tie-up and would pay back the 977 million euros that Banca Civica has received from the state-backed restructuring fund FROB.

At 285 billion euros ($374 billion), CaixaBank is around four times the size of Civica and the move would form Spain's biggest bank in Spain's domestic market, outstripping even Santander (SAN.MC) and BBVA (BBVA.MC).

The latter purchased state-rescued bank Unnim in early March.

As the newly-installed Spanish government aims to reduce the number of lenders to around 10 from more than 40 before the economic crisis, the deal also would make it more difficult to find a merger partner for Bankia SA (BKIA.MC).

Bankia is particularly exposed to real estate and is defined as a systemic bank that could drag other lenders down if it had trouble writing down its losses related to property.

Sources had told Reuters that the government had hoped CaixaBank would step in to absorb Bankia's toxic real estate assets.

The CaixaBank offer has still to be approved by Banca Civica. Its board went into a meeting around 1500 GMT.

Trading in the shares of CaixaBank and Banca Civica was suspended before the market opened. CaixaBank closed at 3.145 euros on Friday, while Banca Civica ended at 2.22 euros. ($1 = 0.7540 euros)

(Writing by Julien Toyer; Editing by Erica Billingham and Gerald E. McCormick)

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