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BBVA and Banco Sabadell walk away from merger

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Miguel A. Rodriguez
Miguel A. Rodriguez
27 November 2020
Financial dissensions led to calling off the deal

The week could have ended with a deal in the Spanish banking sector, but the odds were against it.

Banco Bilbao Vizcaya Argentaria (BBVA) and Banco Sabadell – two Spanish lenders, called off the merger talks as they weren’t able to reach a #consensus regarding the financial terms of the transaction. Banco Sabadell released a statement regarding the situation, which read: “Banco Sabadell informs that the Board of Directors has decided to terminate the above-mentioned discussions because the parties have not achieved an agreement on the exchange ratio of both entities.”

The deal, which was meant to create the second-largest domestic bank in Spain with more than €600 billion in assets, was first announced on November 16. Despite the announcement, BBVA’s CEO Onur Genc stated that he’s in no rush, and the bank will analyze everything and that there are also other options to consider.

From the experts’ point of view, the merger would have been crucial as it would have consolidated the #banking sector given that the lenders are facing financial problems due to the pandemic. It would have also benefited Banco Sabadell as it was considered the weaker link in the possible deal. Even without an agreement, BBVA controls 15% of the Spanish market.

Earlier this month, BBVA made public its deal with PNC Financial. The latter bought BBVA’s American subsidiary for almost $12 billion.

Following the news, BBVA #stock price went up 2.3%, while Banco Sabadell reported a 10% decrease.

Read here all about the deal between BBVA and PNC!

Sources: cnbc.com, markets.businessinsider.com

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.