Spanish bank BBVA (BBVA.MC) has approached smaller rival Sabadell (SABE.MC) about a possible merger, it said on Tuesday, a deal that could create a lender with assets of close to 1 trillion euros ($1.07 trillion).
The talks between Spain's second and fourth-largest banks come almost four years after previous negotiations over a tie-up collapsed. Shares in Sabadell jumped more than 7% on the news, while BBVA's stock dropped 6.5%.
BBVA said it had appointed advisors and told the chair of Sabadell's board of directors of its interest in initiating negotiations over a potential merger.
Sabadell confirmed it had received an indicative written proposal from BBVA for a tie-up. Its board "will properly analyse all aspects of the proposal", it said in a statement.
The potential merger comes on the heels of a period of consolidation in the Spanish banking industry as lenders seek to cut costs and boost scale.
Today Spain has 10 banks, down from 55 before the 2008 global financial crisis.
Sky News had earlier reported that BBVA was working with advisors on the initial stages of an-all share deal with Sabadell.
A source familiar with the matter said UBS and JPMorgan were advising BBVA on the talks. JPMorgan and BBVA declined to comment, while UBS was not immediately available to comment.
PREVIOUS TALKS CALLED OFF
Sabadell and BBVA called off merger talks in November 2020 as they did not agree on the terms of the deal, including the price tag.
Differences between BBVA and Sabadell over the value of British unit TSB, which was bought by Sabadell in 2015 for 1.7 billion pounds ($2.29 billion), were partly to blame for the talks collapsing, a source with direct knowledge said then.
BBVA did not want to pay more than 2.5 billion euros for Sabadell, while Sabadell was not willing to accept anything less than 3 billion euros, the source said, with the difference partly down to TSB.
Since then, Sabadell's share price has increased five-fold and it has reported a strong run of rising profits, helped by higher interest rates. BBVA's shares have also soared, aided by its booming Mexican business and a wave of shareholder payouts.
Recent banking deals in Spain include the acquisition of Liberbank by Unicaja (UNI.MC), sealed in July of 2021 for 763 million euros.
In March of 2021, Caixabank completed its 4.3 billion euro acquisition of state-owned Bankia, creating Spain's biggest domestic bank with now more than 610 billion euros in assets.
($1 = 0.9341 euros)
