BBVA reactivates its interest in Banco Sabadell and proposes a merger plan

BBVA confirmed on Tuesday its interest in initiating new negotiations with the Bank of Sabadell to explore the possibility of a merger between the two entities, according to the National Market Commission. BBVA has appointed advisors for this purpose, while Sabadell’s board of directors will analyze the proposals. BBVA is said to have hired JP Morgan and UBS to evaluate a possible total stock offer. The news of the potential merger caused a rise in Sabadell shares and a drop in BBVA shares.

This would be the second official attempt at a merger between the two banks. In November 2020, they announced negotiations but later broke ties. The current situation has changed, with improved margins, reduced costs, and a profitable British subsidiary for Sabadell. The merger could create one of the largest banking mergers in Europe, forming a true banking giant with combined assets of 1,037 billion and a market value close to Santander.

However, mergers often result in layoffs and office closures due to duplicated services. It is estimated that about 4,000 employees could be affected in this potential merger. The announcement also comes after the six main Spanish banks reported a joint profit of 6,566 million euros in the first quarter of the year, a 15.3% increase compared to the same period last year. Santander, BBVA, and CaixaBank were the top performers.