A MERGER between Banco Sabadell and the BBVA would create the largest financial entity on the high street, with over €950 billion in share capital – although no firm decision has been taken as yet.
Sabadell was originally founded in the province of Barcelona and which bought out the ailing Caja de Ahorros del Mediterráneo, or CAM building society, and the Banco Bilbao Vizcaya Argentaria, or BBVA, which started out life in the Basque Country, are two of the biggest banks in Spain at present.
The other largest two – CaixaBank, originally from Catalunya, and the partially State-owned Bankia, the result of the absorption of Bancaja, Caja Madrid and other entities which were on the brink of collapse during the worst years of the financial crisis – are also in merger talks, although their fusion is definite and imminent.
A combination of Sabadell and the BBVA would be slightly larger, and would put the two banking giants in direct competition.
Talks are being overseen by the National Values Market Commission (CNMV) which is required to monitor large mergers to ensure no monopoly arises.
The CNMV reports that the BBVA and Sabadell have already begun the due diligence process and have appointed independent advisors – JP Morgan and Goldman Sachs respectively, along with law firms Garrigues and Uría Menéndez, in that order.
BBVA stresses that, at present, no decision about the potential operation has been made and that there is 'no certainly whatsoever that it will be adopted', nor the 'terms and conditions' that might apply if it does, in fact, come to fruition.
Already today (Monday), BBVA has announced the sale of its USA-based holding to PNC for a price of approximately US$11.6bn (€9.7bn), which will generate net capital gains of around €580 million and increase the bank's fixed assets by €1.4bn.
Its chairman Carlos Torres and CEO Onur Genç confirmed a 'relevant' share buy-back with the capital surplus derived from the sale of the US holding, and the possibility of ploughing part of the funds into a 'consolidation operation'.
Market analysts are not expecting Sabadell to take part in this hypothetical strengthening operation.
Nevertheless, Sabadell's shares rocketed by 24.59% on the stock market today, reaching €0.419.
BBVA's share price rise was more moderate but still significant at 15.25%, increasing to €3.658.
TWO of Spain's largest high-street banks are reported to be in merger talks, potentially resulting in the joint entity being the second-biggest in the country in terms of share capital.
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