Guide for Bankia customers before the merger with CaixaBank

CaixaBank and Bankia are now just one. With the merger completed, CaixaBank takes over the reins of the new entity, a titan of retail banking in Spain with market shares of close to 25% and more than 20 million customers. Precisely because of its size –it has become the largest national bank by assets– and its clear leadership position in the credit, deposit and branch market, Competition has set conditions for the merger to avoid monopoly risks and financial exclusion.

The National Commission of the Competition Market (CNMC) has identified 86 postal codes where the high penetration of the entity could harm consumers from the Madrid box. For this reason, the new group chaired by José Ignacio Goirigolzarri has made a series of commitments regarding the conditions and commissions of customers in those specific areas, which will be armored in the short term.

All in all, a new scenario is opening up, especially for Bankia's customers, who will begin to notice significant changes when the technological integration of both entities is completed next November. It will be from then on that users will have a single operating platform, a single commercial network and a fully unified catalog of products and services.

For the moment, the Bankia website is maintained, although work has begun to unify the brand, starting with the most significant buildings, such as the Kio Towers in Madrid. Little by little, electronic channels, branches and ATMs will be personalized. “Until now, each entity has competed separately. Any change that affects clients will be communicated to them transparently and sufficiently in advance”, assure sources from the already old Madrid entity.

According to the criteria set by the CNMC, in those locations where its position is predominant, CaixaBank may not modify or worsen the conditions of the original offer to Bankia customers for three years. You will also not be able to charge them commissions for carrying out an operation at the teller window if they previously did it for free and you must open the ATMs to third parties with agreements for 18 months.

Where there is a monopoly, the conditions for Bankia customers are maintained for three years

Eduardo Areilza, senior director of Alvarez & Marsal, explains that "the requirements of the CNMC will ensure, on the one hand, that the service currently received by clients does not worsen due to integration where there are preponderant situations and, on the other, that this circumstance is not taken advantage of to prevent the client from seeking the best alternative to banking products”.

However, EAE Business School professor Ricardo Zion considers that the limitations imposed on CaixaBank are minor, given that it will only have a monopoly position in 21 postal codes, compared to the 11,752 postal codes in Spain. Similarly, he points out that in the field of card issuance, POS terminals and ATMs, the requirements will barely affect 1% of all customers. For her part, Carmen Getino, financial advisor at Getino Finanzas Eafi, indicates that "competition between banks is reduced and consumers lose bargaining power."

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The truth is that some users will be freed from assuming tougher requirements in the short term, but in large cities, for example, they will have to adapt to the new conditions imposed by CaixaBank. According to his CEO, Gonzalo Gortázar, the offer of both entities will converge for a while, but soon there will be homogeneous products. Being the dominant entity, everything indicates that its commercial model will end up prevailing, more focused on the management of long-term savings and more demanding in terms of commissions if the client is not linked. From CaixaBank they emphasize that “there will be no immediate changes in the contractual conditions of the services. The scenario will not change from one day to the next and, later, both the new conditions and the commercial alternatives or discounts that customers could benefit from will be reported”.

Accounts and commissions

One of the first novelties is the change of the IBAN code in current accounts and savings books for Bankia customers up to now. This procedure hardly entails any disturbance, since it is the entity that is in charge of redirecting the new number to the direct debits of income or payments.

In addition, an issue to keep in mind is the reduction of armored money. If you had accounts in both entities, then the coverage of the Deposit Guarantee Fund (FGD) was 200,000 euros. Now, being a single entity, this guarantee is reduced to 100,000 euros per client. "What needs to be assessed is whether our total balance exceeds that limit," says the Bank of Spain on its banking customer portal.

The current account commission reaches 240 euros per year at CaixaBank, compared to 168 at Bankia

The merged entity cannot touch the clauses of mortgages, loans, deposits or insurance, as they are contracts with a defined duration. The conditions can only vary if it is agreed again between the parties. On the other hand, the bank can unilaterally alter the conditions of the accounts and cards because they do not have a time limit. Bankia customers will be able to continue using their cards until they activate the new ones that they will receive from CaixaBank when the computer systems are integrated.

Over time, Bankia customers can see their commissions rise. Those who do not have a link pay 168 euros per year for the accounts, but at CaixaBank the cost is up to 240 euros per year (60 euros per quarter). Gratuity requires having a direct debit salary of more than 600 euros (or a pension of more than 300 euros) or a balance of more than 20,000 euros in investment products. In addition, you have to domicile at least three receipts or make three or more purchases with credit cards per quarter.

Javier Mezcua, from HelpMyCash, believes that "many customers who already meet the requirements for joining Bankia should not have any difficulties adapting to the conditions of the CaixaBank Day-to-Day program and operating for free". The Imagin account, the HolaBank-Living Solutions accounts, the Basic Account and also the Social Account remain outside the Day-to-Day program. As requested by the CNMC, CaixaBank must identify which Bankia customers meet the requirements of that social account and offer them to benefit from its conditions. However, if you are not satisfied with the changes notified before they become effective, you have the right to cancel the product.

On the other hand, the investment funds of Bankia customers may undergo changes in their investment policy, level of risk or commissions, given that a single catalog will be created to avoid duplication of products. Of course, when joining CaixaBank they will form part of an absolute leader group in Spain in investment funds, individual pension and employment plans, and in savings insurance. The volume of assets under management of the new group will be almost 130,000 million euros and the market share in long-term savings will be close to 30%.

For years, CaixaBank has been very clearly committed to discretionary portfolio management, to better adapt to the Mifid 2 regulations. Its strategy has been based on segmenting the offer to give each customer profile a very specialized type of service. The best example is Wealth, where a group of private bankers do purely independent management.

For clients who are starting out in the world of investment, especially young people, it has opted for index management, through the Smart Money fund portfolios. In the case of retirees, CaixaBank has been a pioneer in marketing life annuities, a type of product that allows a property to be converted into a financial income, with very good tax conditions. Chiara Romano, from Scope Ratings, points out that "the merger It will allow CaixaBank to take advantage of cross-selling opportunities with Bankia, which will add 10%-12% of customers with insurance products”.

Restructuring

The merger will entail an adjustment of offices –part with almost 5,700 in the domestic market– and staff –now totaling 46,000 employees– due to duplication. Without giving many details, the board calculates that between 7,000 and 8,000 employees will leave after the absorption of Bankia. The negotiation with the unions will begin in the coming months. Although the commercial network of the new CaixaBank will be the most extensive and diversified – it has 10 million digital clients – it is possible that some clients find that their usual branch has closed. A Barclays report estimates the closure of more than 1,400 offices.

CaixaBank, with a presence in around 2,200 municipalities, undertakes not to abandon any municipal term in which it remains operating alone, a situation that occurs in 299 local areas, although there are exceptions to avoid this rule. In any case, the bank will have to inform customers who are assigned a new office.

Preserve access to ATMs without further fees

Agreements. Bankia customers can now use the CaixaBank ATM network without paying commissions. For their part, the customers of ING, Banco Sabadell and the Euro 6000 network (Abanca, Caixa Ontiyent, Caja Sur, CecaBank, Colonya Caixa Pollença, Ibercaja, Kutxabank, Liberbank and Unicaja), entities that had agreements with Bankia for the use of their ATMs will have access to them for at least 18 months and under the same economic conditions. The CNMC thus ensures that they will not pay higher commissions for the time being.

Closures. In the event that Bankia ATMs close as a result of the operation, customers of these entities will be given access to the closest CaixaBank ATM to the closed one of the absorbed entity. To do this, CaixaBank must duly signpost the affected ATMs so that they are easily identifiable.