Bankia : receives all the necessary authorisations to commence the integration with BMN

• The merger was subject to the approval by the Spanish Ministry of Economy, the Directorate General for Insurance and Pension Funds, the Bank of Spain, the National Markets and Competition Commission (CNMC) and the European Central Bank (ECB)
• The bank expects the merger deed to be registered in the Commercial Registry in the next few days, so that the exchange of BMN shares for Bankia shares can then go ahead
• The exchange ratio will be one Bankia share for every 7.82987 shares of BMN
• In order to carry out the share swap, Bankia will issue 205,630,814 new shares with a nominal value of one euro per share
• It is expected that as from 11 January 2018, BMN shareholders will have at their disposal the Bankia shares delivered to them in the swap, and that the shares will be admitted to trading the following day

Bankia has received all the authorisations required by the Spanish government and regulatory and supervisory bodies in relation to the merger with BMN and so is now able take the necessary steps to bringthe merger into effect.

The merger required the approval of the Ministry of Economy, Industry and Competitiveness, the Directorate General for Insurance and Pension Funds, the Bank of Spain, the National Markets and Competition Commission (CNMC) and the European Central Bank (ECB).

Having obtained the necessary authorisations, Bankia and BMN have executed the deed of the merger before notary public . in the terms agreed by their respective General Meeting of Shareholders and have subsequently submitted all the necessary documents to the Commercial Registry of Valencia.

The bank expects the merger deed to be registered in the Commercial Registry in the next few days, which is a prerequisite for the exchange of BMN shares for Bankia shares.

Exchange ratio

The exchange ratio finally set is one ordinary share of Bankia, with a nominal value of one euro per share, for every 7.82987 ordinary shares of BMN, also with a nominal value of one euro per share, with no additional cash consideration.

In order to carry out the share swap, Bankia will issue 205,630,814 new shares with a nominal value of one euro per share.

GVC Gaesco Beka will act as exchange agent for the merger and as 'fractions agent', acquiring any shares or fractions of shares of BMN which, under the exchange ratio, do not entitle their holders to receive an integer number of Bankia shares.

It is expected that as from 11 January 2018, BMN shareholders will have at their disposal the Bankia shares delivered to them in the swap.

It is also expected that the new shares issued in the merger are admitted to trading on the Spanish stock exchanges from 12 January 2018.

Leaders in Murcia, Granada and the Balearic Islands

The merger will consolidate the new Bankia as the fourth largest financial institution in the Spanish market, with 223,000 million euros of managed assets.

BMN contributes approximately 38,000 million euros of assets to the group, together with a leading franchise in the Region of Murcia, Granada and the Balearic Islands. The resulting entity will present a 20% increase in loan volume and a 28% increase in deposits, and its customer base will have grown by 26%.

Following the merger, Bankia will have market shares of more than 30% in Granada and the Region of Murcia, and 25% in the Balearic Islands. This will add to what is already the leading franchise in large, economically powerful regions such as the Community of Madrid and the Valencian Community.

The merger will allow for cost synergies valued at 155 million euros starting from year three, equivalent to 40% of BMN's current cost base, although it is expectred to achieve most of them by year two, c.149 million euros.

Bankia expects a 16% growth in earnings per share and a return on invested capital (ROIC) of 12% by year three. Additionally, the profitability of the resulting entity, measured as return on equity (ROE), is expected to rise by nearly 120 basis points.

Efficient use of capital

With the merger of BMN, Bankia makes an efficient and effective use of the capital it has generated organically, which has pushed up its CET1 fully loaded ratio from 6.82% in 2012 to 14.16% in September 2017.

After the merger, Carlos Egea will join Bankia's Board of Directors as an independent director. In addition, Joaquín Cánovas, former CEO of BMN, will join Bankia's Management Committee as Deputy General Director for Investees and Associated Businesses.