BBVA begins merger talks with Banco Sabadell 

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.

BBVA bank's board of directors has confirmed to the media that the firm has expressed an interest in a 'possible fusion' with Banco Sabadell, and 'appointed advisors' on the matter.

Banco Sabadell absorbed the now-defunct and ailing CAM bank during the recession years, increasing its presence on the high street and placing it among the biggest names in the financial services industry.

Its share capital is currently valued at just over €236 billion, of which €185.2bn is held in Spain, according to Banco Sabadell's first-quarter results for 2024.

If the merger were to be accomplished, BBVA would be the dominant player, with nearly €802bn in capital worldwide, of which €452.2bn is based in Spain, the bank's most recent accounts reveal.

In total, the resulting mega-bank would hold a global share capital of €1,037bn and €637.5bn nationally.

The stock market value would reach around €73bn, putting the BBVA-Sabadell enterprise only a fraction behind Banco Santander, currently one of Spain's largest corporations.

This figure is nearly double that of the third-largest bank in Spain, CaixaBank, which has a stock market value of €37.5bn.

Worldwide, BBVA has 5,912 branches, of which 1,881 are in Spain – fewer than half, compared with the much more nationally-based Banco Santander, which has 1,203 branches in Spain out of its global total of 1,414.

Following a merger, the resulting corporation would have 7,326 branches and 140,776 employees, of whom over 46,000 are in Spain.

Impact on staff

Many of these 140,776 employees will be feeling apprehensive about the results of merger negotiations, given that this type of operation usually leads to redundancies.

Whilst a number could be redeployed, and a deal may be struck with older workers allowing them to take early retirement, it is estimated that up to 4,000 jobs may disappear due to duplication – particularly in human resources, finances and treasury – and as a consequence of branch closure.

These predictions have been made by professor Ricardo Zion of the EAE Business School, based upon the result of CaixaBank's merger with the partially State-owned Bankia two years ago, when around 6,000 staff members were made redundant.

How a merger would affect customers

Nothing is certain until the National Values Market Commission (CNMV) gives its verdict, since any takeover or combining of companies has to comply with competition laws.

Effectively, it means this financial corporation activity regulator has to ensure any firm arising from a merger will not hold a near-monopoly.

As yet, and as discussions are only just beginning, the effects on customers have not been detailed, but these are likely to be similar to those seen by clients of the CAM bank and then Bankia when they were absorbed by the Banco Sabadell and CaixaBank respectively.

Changes for customers were minimal, with their cards continuing to work until they expired and were replaced with the newly-branded versions, and commission and other charges remaining the same for those with regular in-payments or direct debits.

Analysts expect the Banco Sabadell mobile phone App and website will eventually cease in their current format, but will automatically redirect to those of the BBVA.

IBAN numbers would probably change, but customers would be given plenty of notice of their new account details, and any existing standing orders or direct debits would be reset accordingly by the bank staff, with no intervention needed by the account holder.