Spain's Unicaja expects progress in Liberbank merger talks in coming weeks

By Jesús Aguado

MADRID, Oct 28 (Reuters) - The chairman of Spanish lender Unicaja UNI.MC, Manuel Azuaga, on Wednesday said he was expecting progress in merger negotiations with rival Liberbank LBK.MC in the coming weeks.

European banks are under pressure to join forces to deal with rising bad debts, low interest rates and the COVID-19 pandemic. The merger would create Spain's fifth-largest lender with more than 100 billion euros ($118.19 billion) in assets.

"We hope that, in the coming weeks, progress can be made regarding the exploratory work of this transaction," Azuaga told a shareholders' meeting, adding that due diligence was still being carried out and no agreement had yet been reached after the lenders hired advisers earlier this month.

Without giving further details, Azuaga said there had been some progress in talks between both the lenders and the authorities, who would have to sign off on any deal.

Shares in Liberbank have reversed gains made after news of the possible merger first emerged at the beginning of October, while Unicaja's have fallen almost 15%. That leaves the lenders with a combined market value of around 1.63 billion euros, according to Reuters calculations based on data from Refinitiv.

Unicaja, with 63 billion euros in assets and a market value of 910 million euros, and Liberbank, with assets of 46.8 billion euros and a capitalisation of 716 million, called off earlier merger talks last year after failing to agree a share swap.

Spanish investment firm Alantra said that the merger ratio was 60/40 in favour of Unicaja on Oct.5, compared to 57/43 in May last year.

Alantra has estimated the lenders would achieve 125 million euros of cost efficiencies on top of the 35 million euros of savings factored in for Unicaja on a standalone basis.

($1 = 0.8461 euros)

(Reporting by Jesús Aguado; additional reporting by Emma Pinedo; editing by Ingrid Melander, Kirsten Donovan)

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