Banco Popular, Spain’s fifth-biggest listed bank by assets, has offered to buy its smaller listed rival Banco Pastor in a merger that marks a new stage in the restructuring of the country’s financial sector. In filings published on Friday by the Comisión Nacional del Mercado de Valores (CNMV), the market regulator, the banks said they were proposing a friendly all-share deal in which Popular would offer to buy 100 per cent of Pastor. More ON THIS STORY Dismay at Spanish bank restructuring Spain nationalises three more savings banks In depth European banks Santander predicts return to big profits Global Insight Italy and Spain The CNMV had earlier suspended trading in shares of Popular, with a total market value of €4.99bn, and of Pastor, valued at €827m, apparently after news of the discussions leaked before the planned announcement on Monday. At Friday’s share prices, the Popular offer represented a one-third premium for Pastor and valued the target bank at 0.75 times book value, according to the Pastor camp, although Popular’s share price could fall once the suspensions are lifted. CaixaBank, the banking arm of the Barcelona-based La Caixa savings bank, was valued at 0.8 times book value at its flotation earlier this year, but Bankia, comprising Caja Madrid and six others, managed only 0.4 times when it was listed. Three savings banks seized by the official bank rescue fund last month were valued at between zero and 0.12 times book. Until now, the Bank of Spain and the Spanish government have focused on forcing unlisted savings banks to recapitalise themselves and merge with each other to reduce costs and improve efficiency after the collapse of the Spanish housing and construction bubble. Listed banks have been seen as potential buyers rather than takeover targets. “This is only the start,” said one person aware of the talks as the boards of the two companies held separate meetings. “There is going to be a huge shake-out in the banking sector.” Popular is a national Spanish bank that has focused on retail banking and lending to small and medium-sized businesses, while Pastor’s activities are concentrated in the north-western region of Galicia. Pastor – along with four Spanish cajas or savings banks – was one of the nine European banks that failed Europe-wide stress tests in July.