Date Published: 17/11/2020
ARCHIVED - Merger talks between BBVA and Banco Sabadell - two of largest banks in Spain
ARCHIVED ARTICLE Two of the largest banks in Spain consider joining forces with the banking sector in turmoil
The state of turmoil into which the Spanish banking sector has been thrown by the coronavirus pandemic continues to show few signs of abating, and as speculation continues to surround numerous possible re-structuring operations the latest potential merger under consideration involves the BBVA and the Banco Sabadell.
Both have contracted investment analysts to evaluate a possible merger which, if it were to go ahead, would mean a coming together of the second and fifth largest banks in Spain. The upshot would be a single company managing almost 600,000 million euros’ worth of assets in this country, plus millions more abroad.
No official comment has been issued by either bank to confirm that negotiations are taking place but reaction to the news that the National Securities Market Commission has been informed of talks was positive on the stock market, as the share prices of both BBVA and Sabadell rose. A due diligence process has been set in motion and the talks between the two banks are likely to last for months.
Until now the BBVA had not appeared over-enthusiastic about the prospect of merging with a rival but the Sabadell has been far keener, attempting to join forces with Bankia last year in a deal which finally fell through.
There is still a long way to go if this proposed operation is to fare better, but already financial analysts are pointing out that the result of the merger would be a bank with a strong presence not only in Spain but also in Mexico, the UK and Turkey. Back in this country, meanwhile, the BBVA is already one of the leading providers of banking services throughout Spain, while the Sabadell is particularly strong in the eastern Mediterranean coastal regions of Catalunya and Valencia and in Madrid.
Mergers are seen very much as a practical way of handling the potential economic effects of an economic crisis and this is the second major merger in the Spanish banking sector recently; the Bankia-CaixaBank merger is due to take effect in early 2021.
On the 1st September former Spanish Minister of the Economy and Vice-President of the European Central Bank (ECB), Luis de Guindos, spoke at an economic forum in Santander about the potential implications of the growing economic crisis and warned that:“Cost reductions and consolidation have become much more essential because of the crisis”, his belief being that the start of a new wave of mergers was inevitable should there be a second wave of covid cases, “Mergers can be useful at a national level and at a cross-border level (…), and should be put into operation relatively urgently ”.