BBVA & Sabadell in talks to create Spain’s second-largest domestic lender

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BBVA & Sabadell in talks to create Spain’s second-largest domestic lender

On Monday, Spain’s Banco Bilbao Vizcaya Argentaria SA, shortly dubbed as BBVA, alongside its smaller regional rival Sabadell had issued a joint statement saying the lenders had been in an advanced-staged merger talk which in effect would create the second-largest domestic bank in Spain behind Banco Santander in terms of assets, marking up the latest among a string of moves to consolidate a struggling banking sector in the eurozone’s fourth-largest economy.

In point of fact, latest move from Bilbao-based BBVA, one of the largest financial services providers in the world primarily focused on Spain, Latin America, Turkey and Romania, came forth a month after Caixabank, the Spain’s third-largest lender by market valuation, had agreed to purchase Bankia in a €4.3 billion buyout deal, while a BBVA-Sabadell merger in effect would create a new entity having more than €600 billion in market valuation in Spain, based on Monday’s closing prices, Refinitiv data had revealed.

BBVA, Sabadell eye merger in latest consolidation of Spain’s banking sector

In tandem, if BBVA and Sabadell could reach a final accord over a potential merger deal, the newly formed entity would have a lump-sum of €860 billion in total assets, however, the merger would still remain miles behind the country’s largest lender Banco Santander which has a balance sheet worth of €1.5 trillion.

Notably, BBVA-Sabadell merger talks were brought into light in an utterly critical period for the Spanish lenders, which had long been witnessing a muffled momentum amid a record low interest rate, while the latest pandemic-driven economic downturn coupled with a likely monetary policy easing from ECB (European Central Bank) at its December meeting, had compounded the narratives further, while a slew of Spanish lenders were forced to focus on an excruciating cost cut alongside potential mergers in order to stay afloat.

Meanwhile, adding that the lenders had been engaged in potential merger talks, but a final accord had yet to be agreed, BBVA said in a stock market filing earlier in the day, “The entities have initiated a reciprocal due diligence review process as is customary in this type of transactions and have appointed external advisers.

It is noted that no decision has been made in relation to the potential merger transaction and that there is no certainty as to whether any such decision will be made or, if that is the case, as to the terms and conditions of a potential transaction.

” Besides, on Monday’s market round off, Sabadell shares’ prices snowballed as much as 24.6 per cent to €0.41 apiece, while BBVA shares took an exploding dive of 15.3 per cent to wrap up the day at €3.65 per share.