* Decision on merger expected before summer break
* Talks focus on headquarters, pensions and governance
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SANTANDER, Spain, June 17 (Reuters) - Spanish savings bank Caja Madrid, a key shareholder in Iberia, expects a decision on the airline's planned merger with British Airways before the summer break, its chairman said on Wednesday.
"We expect and want a decision before summer (break)," Miguel Blesa said when asked how merger talks were progressing. "As talks move forward, I believe we are closer to an agreement."
Most Spaniards takes their summer holidays in August.
There were three main points on the table, including the headquarter's location, pension funds and corporate governance, Blesa said.
The proposed merger between the two airlines was first announced in July 2008, though talks have been complicated by disagreements over BA's pension deficit and the ownership split between the two companies.
Financial uncertainty, market volatility and a power struggle within Caja Madrid have also helped to keep the deal on hold.
At 1025 GMT, Iberia shares were trading down 1.32 percent at 1.50 euros, and British Airways was 1.61 percent lower at 1.34 pounds. (Reporting by Paul Day; writing by Judith MacInnes, editing by Will Waterman)