Spain’s BBVA and Sabadell fail to agree on price, end tie-up talks; TSB up for sale

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Spain’s BBVA and Sabadell fail to agree on price, end tie-up talks; TSB up for sale

Bilbao-headquartered Spanish lender BBVA and its smaller regional rival Sabadell concluded a potential merger talk on Friday after the financial services providers had botched to agree on prices, putting a halt to a string of merger and acquisitions in Spanish banking sector which had witnessed a shrinkage to 12 from 55 lenders since the Great Financial Depression of 2007-2009, the companies said in a separate statement late in the day.

Aside from that, as Sabadell had failed to reach a potential merger deal with BBVA which in effect would have created the bloc’s fourth-largest economy’s second-largest lender with assets worth of €600 billion, the drawdown had ratcheted up pressures on the smaller BBVA rival, while the smaller Spanish bank was quoted saying following the announcement that it would soon unveil a new business strategy that would involve a sale of its money-draining British subsidiary TSB.

Besides, Sabadell had also pledged to focus on its home market. Nonetheless, latest collapse on a critical BBVA-Sabadell merger talk came forth at a time when a raft of European lenders had been lavishly languishing amid an ultra-low interest rate alongside the pandemic’s fiscal consequences, while many European lenders were forced to a series of cost-trimming measures including mergers and sales of oversees assets.

TSB up for sale as Sabadell mulls “strategic alternatives”

On top of that, followed by its failed merger talk with BBVA, Sabadell had asked the US lender and financial services provider Goldman Sachs to find a buyer for its loss-making British subsidiary TSB which it had purchased back in the 2015s, said at least two banking sources familiar with the subject-matter, however, investment firm Alantra had told that a deal for TSB might be complicated since Sabadell would be seen as a forced seller.

Concomitantly, following less than two days of tie-up talks with Sabadell that had botched to bear fruits, BBVA Chief Executive Onur Genc was quoted saying that the Spanish lender had better alternatives rather than pouring money on loss-making Sabadell which might include a large-scale share repurchase program.

Following the announcements, shares’ prices of Sabadell were slumped as much as 13 per cent, while BBVA gained roughly 4 per cent on Friday’s market wind down.