Banco Bilbao Vizcaya Argentaria (BBVA), the second-largest bank in Spain, has approached smaller domestic rival Banco Sabadell over a merger that could create a group worth roughly €70bn (£60bn).
BBVA said in a regulatory filing on Tuesday that it had appointed advisors and conveyed an interest to Sabadell’s chair “in initiating negotiations to explore a potential merger transaction between the two entities”.
Sabadell, Spain’s third-biggest bank, confirmed it had received an indicative written proposal from BBVA for a merger on Tuesday afternoon, saying its board would “properly analyse all aspects of the proposal”.
BBVA said it had appointed advisers for the possible deal, which Sky News reported earlier included JPMorgan Chase. The latter firm declined to comment.
BBVA is the eurozone’s second-biggest bank with a market capitalisation of roughly €60bn, while Sabadell is valued at roughly €10bn. Their combined valuation would come close to Santander’s nearly €80bn market cap.
Sabadell and BBVA previously called off merger talks in November 2020 after disagreeing on the terms and price of the deal.
The breakdown was reportedly triggered in part by a clash over the valuation of TSB, one of Britain’s biggest high street banks, which Sabadell bought for £1.7bn in 2015.
Sabadell has considered selling TSB in the past but rejected an offer from The Co-operative Bank in 2021. Meanwhile, BBVA has a much more limited presence in the UK, with a large stake in app-based Atom Bank.
News of a potential merger comes after a period of consolidation among Spanish lenders following the financial crisis, with the number of banks in the country falling to 10 today from 55 in 2008.
BBVA and Sabadell have seen a boost to their profits from higher interest rates in recent times, with their share prices soaring 61 per cent and 97 per cent in the last 12 months respectively.
BBVA shares fell 2.4 per cent on Tuesday, while Sabadell was up 3.22 per cent.