Unicaja Banco and Liberbank confirmed on Wednesday that they are starting formal talks over joining forces. Any successful negotiation to merge would create Spain's fifth largest bank.
Malaga-based Unicaja and Madrid-based Liberbank have started detailed talks in the past, but these were called off in May 2019 after no agreement was reached on which company would have the most weight in the new entity.
The share prices on the Spanish stock exchange of both banks shot up on Monday on the fresh news. Unicaja Banco closed the day with a rise of 14.55% and Liberbank with 13.58%.
The rest of the Spanish banking sector also saw rises, as investors hoped for more mergers and acquisitions. The European Central Bank has been calling for a consolidation in the European banking sector, which is seen as vulnerable in the wake of a fall in profits due to the Covid-19 crisis.
A merger is already under way between CaixaBank and Bankia to create Spain's largest bank and Banco Sabadell is viewed as vulnerable to a takeover.
Unicaja Banco and Liberbank said on Monday their conversations had so far been "routine" to analyse "possible opportunities". However on Wednesday it was confirmed that the boards of both firms had given the go ahead for auditors to come in to value them.
The last negotiations in 2019 foundered when Unicaja refused to have less than 60% of shares in the new company and Liberbank wanted more than 40%.
At the end of June, Unicaja Banco, a big employer in Malaga province, had 63 billion euros in assets, 6,274 staff and 1,029 branches. Liberbank had 45bn assets, 3,698 staff and 579 offices.
Unicaja grew out of savings banks principally in Andalucía, while Liberbank was formed in 2011 by former savings banks in the centre and north of Spain.