Spain’s new government is pressing for Bankia, a group of savings banks listed last year, to seek a merger with another Spanish bank in a deal that would create the country’s largest domestic lender by assets if it materialised, the FT says, citing unnamed bankers in Madrid. The three possible candidates are Santander, BBVA and Caixabank – the country’s biggest institutions. But the first two have remained profitable through the crisis thanks in part to their foreign investments, and their executives are wary of increasing exposure to the moribund domestic property market. The third, Caixabank in Barcelona, denied on Tuesday that it was in discussions with Bankia, in Madrid, over a possible deal. Bankia also said it was not contemplating such a merger. Spain’s economy ministry, responsible for the financial sector, reiterated the government’s call for a fresh round of bank mergers, while declining to comment directly when asked about Bankia.