MADRID (Reuters) - Spanish lender Unicaja will own 59.5% of the new entity created by its merger with Liberbank, the lenders said on Wednesday, in an deal that valued Liberbank at 763 million euros ($937.12 million). The boards of Unicaja and Liberbank approved on Tuesday a merger in which Unicaja will fully absorb its rival to create a bank with 110 billion euros in assets. The merger is part of a consolidation process in the Spanish banking industry and more broadly in Europe. Unicaja will grant 1.075 billion new shares to the holders of Liberbank as part of the deal, valuing Liberbank at around 763 million euros, taking into account the closing price on Tuesday of Unicaja shares, brokerage Jefferies said. It added the offer represented a 5% discount on Liberbank’s closing price on Tuesday. Shares in Unicaja rose more than 4% in early trade on Wednesday before slipping to trade 0.7% lower, while shares of Liberbank were down 4.4%. The merger will allow the combined bank, the country’s fifth biggest in terms of assets, to make 192 million euros in annual cost savings and reach a capital ratio of 12.4% after 1.2 billion euros of costs related to the merger, the banks said. “The transaction will allow the combined entity to gain size to face in the best possible way the challenges of the industry,” Unicaja said in a statement, referring to the economic environment, low interest rates and digital transformation. The combined bank aims for a return on tangible equity of around 6% in 2023 and expects to see its profit per share to be 50% higher in 2023 than the market expected. Italian bank Mediobanca advised Unicaja on the deal, while Deutsche Bank advised Liberbank. The deal follows the approval of a merger earlier this month between state-owned Bankia and Caixabank to create the largest domestic lender and marks an acceleration of the sector’s consolidation after BBVA and Sabadell called off merger talks last month. European banks, struggling with ultra low interest rates and the fallout from the COVID-19 pandemic, have been forced to focus on cutting costs, either alone or through tie-ups. Regulators in the region such as the European Central Bank are pushing for more consolidation. ($1 = 0.8142 euros)