Cuatrecasas and Garrigues advise on Spanish banking mega-merger

Garrigues gave M&A and tax advice to regionally controlled financial institutions Caixa Catalunya, Caixa Tarragona and Caixa Manresa, whose boards voted unanimously in favour of the deal. The merger is worth €4.2bn in terms of aggregate turnover.

Partner Ramo Girbau led on the deal for Garrigues alongside associate Naiara Bueno. Partner Lluís Cases advised on antitrust matters.

Cuatrecasas provided the banks with labour law advice. Partner Jordi Puigbó led on the deal, assisted by partner Guillermo Garcia and associates Eva Muñoz and Manel Fresco.

The new entity created by the merger is called Caixa Catalunya and will have €81bn in client assets and 1,215 offices. Caixa Catalunya has stated that it wants to become a leader in retail banking and aims to be 20 per cent more productive by 2015.

Caixa Catalunya is also set to receive €1.2bn from the state rescue fund Fondo de Reestructuración Ordenada Bancaria (Frob).

“This merger could be considered as a perfect model for others to follow as it represents the first merger of savings banks in Spain under the Spanish 2009 rescue package for financial institutions,” said Girbau.

The deal is the largest merger between savings banks in Spain to date. Savings banks suffered greatly in the crisis, continuing to sell mortgages even after commercial banks started limiting their exposure.

In the fourth quarter of 2009 Miguel Ángel Fernández Ordóñez, the governor of the Bank of Spain, said he wanted to see a third of the country’s 45 savings banks absorbed into stronger institutions.

But mergers between savings banks have proved difficult, with resistance from managers and local politicians, who are protective of their regional financial institutions, and also because of difficulties surrounding Frob financing.