The Portuguese Council of Ministers has given the green light to the acquisition on the part of Abanca of the business of Caixa Geral in Spain for a price of 364 million euros, to be imposed in the auction in which it competed against Cajamar has to be done with the Spanish subsidiary of the Portuguese. The entity thus becomes the seventh largest bank in Spain by heritage and in the eighth by assets.
The price paid is the result of applying a multiple of around 0,65 times the book value, book value, of the acquired company, as the entity headed by Juan Carlos Escotet, economist and banker in venezuela. “This transaction generates significant value for Abanca and adds a positive value through the goodwill negative, badwill . This value is generated when a company purchases another to a value lower than its book value or market. This usually happens when the prospects of the company acquired are not good. Abanca will use the badwill to “strengthen the business result and to perform the integration.”
Escotet also used this goodwill negative when your bank, Banesco, acquired NovacaixaGalicia by 1,000 million, in a savings bank in which the State had injected some 8,000 million. The purchase was made in December of 2013, five years ago. That goodwill negative allowed in 2014 Abanca won 1.157 billion euros, more than the 1.003 million that had been paid to the State.
In a press note, the entity has ensured that “the Portuguese authorities have welcomed the development project presented by Abanca, which, among other issues, will involve the application to the entity that acquired the technological capabilities of the bank with headquarters in Galicia, its operating model and relationship with the client and their business capabilities to specialise in segments of high value”.
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Abanca has ensured that the purchase is beneficial to your business because Bank Caixa Geral has remained “in a position of profitability in the last four years, he has a delinquency rate of 3.1%, lower than the average of the Spanish market, and has a solvency ratio of 17.3% (December 2017)”. Once decided on the award to Abanca, the process begins with the obtaining of the corresponding administrative authorisations. From there, the bank will begin the process of integration.
Abanca says that this acquisition serves to increase by 7,000 million euros in volume of business and allows you to move up one position in the ranking of Spanish banks by net assets, up to the seventh place. Equally, it also goes up two levels in the ranking of the sector by assets, up to the eighth position, which, according to the bank, assumes a “step” in their process of growth.
110 offices in Spain
Banco Caixa Geral is a Spanish bank resulting from the merger of Banco Simeon Banco de Extremadura and Chase Manhattan Bank España (later named Banco Luso Español) that form part of the financial group Portuguese bank Caixa Geral de depósitos, present in 23 countries. The subsidiary, which purchase Abanca has 110 offices in ten autonomous communities of Spain.
Bank Caixa Geral has a template consisting of 524 individuals who provide service to 31.640 individual customers and also to companies, with a business of 3.446 million in credit, of 2.950 million in customer deposits and 389 million in assets under management.
