MADRID (Reuters) - Shareholders of Spain’s state-owned lender Bankia on Tuesday approved a merger with bigger rival Caixabank to create the country’s biggest domestic lender with more than 600 billion euros in total assets. In September, Caixabank agreed to buy Bankia for 4.3 billion euros ($5.16 billion) in an all-share deal underpinned by annual cost savings of 770 million euros. “The combination of both lenders will lead to a generation of synergies that will allow a much higher profitability than what could be achieved by both entities separately,” Bankia’s Chairman Jose Ignacio Goirigolzarri told shareholders. European banks are struggling with the effects from ultra low interest rates and the economic-fallout from the COVID-19 pandemic is forcing lenders to further cut costs on a stand-alone basis or through tie-ups. The blessing from Bankia shareholders came just days after Spain’s banking consolidation wave suffered a blow when BBVA and Sabadell on Friday called off their merger talks to create the country’s second-biggest domestic lender due to a disagreement on price. Caixabank will hold its own shareholders’ meeting on Thursday to vote on the transaction, which will be scrutinized in the coming weeks and months by Spain’s competition watchdog CNMC. The deal needs to be authorised by the Economy Ministry, after being reviewed by Spanish and European supervisors. Reporting by Jesús Aguado; additional reporting by Emma Pinedo; editing by Ingrid Melander