The break by the alliance that Bankia and Bankia maintained in the bancassurance business will go to arbitration. CaixaBank, which absorbed Bankia at the beginning of this year, has paid the insurer 571 million euros for the end of the agreement, a figure that the company led by Antonio Huertas considers insufficient, based on the assessment that Willis Towers Watson made of the joint venture of the life business, Bankia Vida. The groups had to choose a non-party valuer to settle the dispute and chose Oliver Wyman. However, Mapfre has expressed its disagreement with the valuation of both the life and non-life businesses, on which it claims an additional 52 million euros, and has announced that it will take legal action to resolve it.
CaixaBank and Mapfre reported today to the National Securities Market Commission (CNMV) the breakdown of the agreement for which the financial institution has paid 327.7 million on one side to acquire the 51% that the insurer maintains in the firm Bankia Vida. Following this acquisition, which is expected to close in the first quarter of 2022, CaixaBank, through its subsidiary VidaCaixa, will own 100% of Bankia Vida.
Likewise, on the other hand, the bank has also paid another 247 million to the insurer for the termination of the contract in the non-life business.
Mapfre maintains that the termination of the alliance produced by the entitles it to receive 120% of the valuation of the life and non-life businesses, instead of the 110% set by the independent expert, considering the integration as an expansion of Bank’s network. That 10% difference, equivalent to 52 million, is what will settle the arbitration.
Benefit of 171 million
On the other hand, the insurer reported in a statement that the end of the alliance with Bankia represents a profit from the operation of 171 million. Mapfre indicates that it will allocate 100 million euros to a voluntary redundancy program to be developed in the next two years. Likewise, it will also advance in the digitization of its business in Italy, and will optimize the financial structure after the debt buyback operation carried out a few weeks ago. These decisions to strengthen future profitability will produce at least 161 million estimated savings over the next five years, according to the group.
For its part, CaixaBank pointed out that the termination of the agreement “will not have a significant impact” on its 2021 results. However, the purchase of 51% of the company Bankia Vida will have a negative impact of 7 basis points on its capital ratio first level (CET 1) at the end of December.
“For information purposes, the contribution of the 49% stake to the consolidated accounts of CaixaBank during the first nine months of the year was 29 million euros in equity-accounted income,” the entity reported, taking into account that the effects accounting of the merger materialized as of March 31.
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