MADRID (Reuters) – Spain’s Unicaja UNI.MC and Liberbank LBK.MC are holding informal talks about a potential tie-up to create the country’s fifth-biggest lender with over 100 billion euros ($117.13 billion) in total assets, a source with knowledge of the matter said.
“Informal talks between the two lenders are taking place,” the source said, adding that it was too early to say if that would lead to formal negotiations.
Both Liberbank and Unicaja declined to comment on the talks.
A source with knowledge of the matter said that Unicaja has not hired any investment bank to look into this potential deal and that no due diligence process was underway.
Both lenders have said in the past they are open to consolidation.
Earlier on Saturday, Bloomberg reported that Unicaja Banco was closer to a long-mooted takeover of Liberbank.
Last month’s all-share deal between Caixabank CABK.MC and Bankia BKIA.MC to create Spain’s biggest domestic lender created expectations of a new wave of mergers and acquisitions among Spanish banks, whose numbers have already fallen to 12 from 55 after the 2008 financial crisis.
Unicaja and Liberbank would have a combined market value of around 1.7 billion euros, according to data from Refinitiv.
Unicaja, with currently 63 billion euros in assets, and Liberbank, with assets of 45.8 billion euros, called off merger talks in May 2019 after the former savings banks failed to agree over a share swap.
European banks are under growing pressure to join forces to deal with rising bad debts and record-low interest rates as they battle the fallout from the COVID-19 pandemic.
More flexibility from the European Central Bank regarding capital requirements could pave the way for more consolidation among banks in Europe.
Italy’s Intesa Sanpaolo bought Unione di Banche Italiane UBI.MI, while Spain’s Sabadell SABE.MC has also held informal talks about a possible tie-up.
A new wave of mergers in Spain could potentially reduce the total number of lenders to about half a dozen, putting the country on a par with Britain, two banking sources and several analysts told Reuters.
Reporting by Jesús Aguado; editing by Jessica Jones, Ingrid Melander and Louise Heavens