BBVA, Sabadell Are in Merger Talks -- Update
November 16 2020 - 1:09PM
Dow Jones News
--BBVA and Sabadell are in talks over a potential merger that
would create a bank with a market cap of about EUR27.5 billion
--The talks follow other M&A operation in the European
banking sector, as Italy's Intesa Sanpaolo SpA has secured support
to acquire UBI Banca, and Spain's CaixaBank is taking over
Bankia
--BBVA shares closed up more than 15% Monday, while Sabadell
gained almost 25%
By Pietro Lombardi
Banco Bilbao Vizcaya Argentaria SA and Banco de Sabadell SA are
in talks over a potential merger that would create a banking giant
with a market cap of roughly 27.5 billion euros ($32.54 billion), a
further signal that a long-expected consolidation in the European
banking sector may be gathering pace.
The coronavirus pandemic has forced European banks to make hefty
provisions for expected loan losses sparked by the crisis, adding
to existing challenges like low interest rates and costs related to
IT and regulation. All this has put the focus back on consolidation
in the overcrowded banking landscape, with Italy's Intesa Sanpaolo
SpA recently securing support to acquire UBI Banca, while Spain's
CaixaBank SA is taking over Bankia SA.
BBVA and Sabadell said Monday that they have started a due
diligence process and appointed external advisors.
"No decision has been made in relation to the potential merger
transaction and there is no certainty as to whether any such
decision will be made or, if that is the case, as to the terms and
conditions of a potential transaction," BBVA said.
The news comes just after BBVA agreed to sell its U.S.
subsidiary to PNC Financial Services Group Inc. for $11.6 billion.
The lender will be able to use such firepower in a potential tie-up
with its smaller peer. Capital was seen as a key obstacle to BBVA's
potential role in M&A, and the sale of its U.S. operations
addresses this issue, strengthening its core tier-one ratio by
roughly 300 basis points to 14.5%, well above regulatory
requirements. It also boosts its valuation.
With European regulators moving to ease some conditions for
mergers and the Spanish Prime Minister having recently called for
more consolidation, investors had bet on this potential merger.
On Monday, BBVA shares closed more than 15% up, while Sabadell
gained almost 25%.
Write to Pietro Lombardi at pietro.lombardi@wsj.com;
@pietrolombard10
(END) Dow Jones Newswires
November 16, 2020 12:54 ET (17:54 GMT)
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