La Caixa has agreed for its listed arm, CaixaBank, buy out their smaller rivial Banca Civica in a £915 deal. The deal valued the whole of Banca Civica at around €980, as La Caixa offered €1.97 per share and the deal makes La Caixa Spain’s biggest bank in terms of assets.

The deal comes as new government laws have encouraged mergers between banks after several collapsed following the bursting of the property bubble. Civica itself was formed out of combining four struggling regional banks. The merger will mean La Caixa will have around 14 million customers.

"The merger will help to consolidate the restructuring of the Spanish banking sector, by creating a leading bank in the Spanish financial system with an extensive regional presence, which will help support the country's economic development," the bank said.

The deal is expected to generate cost savings and other benefits to the vaue of around €540 million by 2014.