BBVA seeks to merge with Sabadell

BBVA took the market by surprise when it announced its “negotiations to explore a possible merger” with Sabadell Bank on April 30. 

The merger of the two entities would result in a market value above  €70,000 million and with volume of assets of  €1,037 trillion, making it the largest bank in Spain.

On April 30, BBVA communicated to the National Securities Market Commission: “BBVA confirms that it has conveyed to the president of the Board of Directors of Banco de Sabadell the interest of the Board of Directors of BBVA in starting negotiations to explore a possible merger between both entities,” for which reason “we have appointed advisors for this purpose.” 

If the merger is realized, the high figures of its assets would outperform CaixaBank in being the largest bank in Spain, coming just behind Banco Santander if its international businesses are added, and third largest in Europe after BNP Paribas.

Although unprecedented, this is not BBVA´s first attempt at merging with Sabadell. In November 2020 the two companies revealed that they have been negotiating a merger but as Sabadell stated, they did not reach an agreement on the final price of the operation.

Sabadell Bank commented that they expected the merger to begin through an exchange of shares, not in cash like BBVA then insisted.

After BBVA´s announcement, the entity fell 6.65 per cent on the stock market, while Sabadell rose 3.37 per cent. 

The EAE Business School professor, Ricardo Zion, shared the calculated effects of the merger, revealing that it may cause “the departure of employees” , considering the possible duplications generated by the cost reduction and synergies. He shared that the operation would affect at least 4,000 employees, out of the 140,000 job positions which the two banks have.

Yet, BBVA´s claim for a merger caused a momentum of consideration of Europe´s banking market acceleration, with Spain climbing up in the international bank positions.