Sabadell Trades Higher, BBVA Lower as Merger Talks Revealed
November 17 2020 - 4:42AM
Dow Jones News
By Joshua Kirby
Shares in Banco de Sabadell SA traded higher in opening trade
Tuesday, while its peer Banco Bilbao Vizcaya Argentaria SA traded
down, following news that the two Spanish banks were in talks over
a tie-up.
BBVA said Monday that the pair had started a due-diligence
process and appointed external advisors ahead of a potential
merger.
The announcement came the same day as news that BBVA had agreed
to sell its U.S. subsidiary to PNC Financial Services Group Inc.
for $11.6 billion.
Shares in Banco de Sabadell at 0850 GMT were up 2.5% at EUR0.43,
while BBVA shares were down 4.2% at EUR3.50.
BBVA's sale of its U.S. subsidiary will ease a potential
Sabadell tie-up by precluding the need to raise any further
capital, analysts at Jefferies said in a note. A deal would be
strategically reasonable, as it would give BBVA a broader SME
footprint and a wider spread of market share across Spain's
regions, Jefferies said.
Potential complications include Sabadell's ownership of U.K.
lender TSB Bank and competition issues in the region of Catalonia,
Jefferies said. Nonetheless, Jefferies estimates a 19% accretion to
BBVA's earnings per share in case of an all-share deal.
News of the potential tie-up comes in the wake of a merger
agreement earlier this year between two other Spanish lenders,
CaixaBank SA and Bankia SA.
Write to Joshua Kirby at joshua.kirby@dowjones.com;
@joshualeokirby
(END) Dow Jones Newswires
November 17, 2020 04:27 ET (09:27 GMT)
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