June 28, 2010

Caixa Galicia and Caixanova approve merger protocol and plan.

Galician cajas request EUR 1.2 billion from FROB for merger

•   Protocol requires Board of 22 members with two co presidents
•   Management team will have 12 executives, 6 from each caja

This afternoon both Caixanova and Caixa Galicia boards approved merger protocol and plan to create financial entity with 90 billion euros of business volume and network of over 1,100 branches. Boards of both cajas approved the projects and petition for 1,162 million euros from Bank of Spain and FROB Commission. The Galician cajas will present documentation officially to Bank of Spain tomorrow.

The Xunta de Galicia was also informed regarding the content of both documents and the current management committees. Executives from the two cajas also met this afternoon to report on the content of the agreements to employees' union representatives.

The merger plan includes the management team of the new Galician caja, consisting of 12 executives, 6 from each caja. The merger protocol envisages the creation of a new Board of Directors of 22 members, two of whom will be co presidents of the new institution.

Merger Protocol

The merger project extends the board agreements of 11 May and 14 June 2010 and it aims to define the organizational structure and functions of the new caja during the transitional merger period and the basic formulation of the merger project with compliance with the merger project as its primary objective.

Agreements include the governing principles for the transitional period, the parity of members of each caja in the governing bodies, the continuity of current members and the presence of all the current stakeholders of each caja.

The General Assembly will have 320 general board members (160 from each caja); The Board of Directors will have 22 Members (11 from each caja) and the Audit, Executive and Remuneration, Investment and Community Project boards will also be have equal numbers from each caja.

For the first half of the transitional period presidential functions will be assumed by the Caixanova co president and for the second half by the Caixa Galicia co president. The president will have the decisive vote where applicable.

This order will be reversed by the Audit Committee and the Board of Directors for the two halves of the transitional period, so that the first presidential phase will correspond to Caixa Galicia and the second to Caixanova.

Two territorial boards will also be constituted, one in A Coruna (covering territorial scope of  provinces of A Coruna and Lugo) and another in Vigo (covering Pontevedra and Ourense).