Spanish banks Caixabank and Bankia are in talks about a merger to create the biggest domestic lender in Spain with more than €650 billion in assets.

A merger would create a bank with a combined stock market value of roughly €14 billion as of Thursday.

Caixabank said in a stock exchange statement it is discussing an all-share merger with Bankia.

Bankia, in which the Spanish Government holds a stake of over 60%, said: “Given the news released through several media platforms Bankia confirms being in contact with Caixabank, with knowledge and authorization from the board of directors, in order to analyze an eventual opportunity regarding the merger of both entities.

“We would like to state that a proposal to initiate a study and ananalysis has been submitted to Bankia’s governing bodies.

“This proposal will enable the board of directors to take the corresponding informed decision, relying on suitable advisory for this purpose.

“Any decision taken regarding this issue will be notified.”

Caixabank said it had so far not reached an agreement with Bankia beyond an exchange of information to appraise the transaction. 

Bankia was bailed out in 2012 via a €22.4 billion rescue package.

The Spanish Government has until the end of 2021 to sell its stake in Bankia.

Before news of the merger talks broke, Caixabank had a stock market value of roughly €11 billion and Bankia’s market value was about €3.2 billion, according to Reuters data.