BBK, Caja Vital and Kutxa announce 'cold merger'

The three Basque savings banks, Biscay''s BBK, Guipuzcoa''s Kutxa and Alava''s Caja Vital, are to go ahead with the merger process. They banks have requested a joint banking license, a requirement of forming a ''cold merger'', which will involve each bank keeping its own brand, staff and branch networks while combining some central functions under a single management.

The agreement was reached on Wednesday between the Presidents of each of the banks, Mario Fernández (BBK), Xabier Iturbe (Kutxa), and Carlos Zapatero (Vital), and will involve the creation of a bank with assets of around 80,000 million euros, 50,000 of which will come from BBK, the biggest of the three.

Once the agreement is finalised, it will be subject to approval by the boards of each entity. Basque President, Patxi López, and the Basque Economics and Finance Councilor, Carlos Aguirre, will meet with each of the Presidents on Friday to analyse the agreement.

A rocky process

According to Spanish economist newspaper, Cinco Días, the agreement, which has the support of the Basque Nationalist, Socialist and Popular parties, is supposedly the finalisation of a natural merger process.

However, the paper cites many pitfalls, not least the previously failed attempt to form a "hot merger" between the three banks.