Spanish banks BBVA and Sabadell study merging

The banking group BBVAthe second bank in Spain and with a strong presence in Mexico, announced on Tuesday that it contacted its competitor Sabadell to start conversations about a “possible merger”, more than three years after the failure of a first approach.

“BBVA confirms that it has conveyed to the Chairman of the Board of Directors of Banco de Sabadell SA its interest (…) in starting negotiations to explore a possible merger“, indicated the bank in a short statement sent to the Spanish stock market control body (CNMV).

This brief note, which states that “has appointed advisors for this purpose”, does not give more information about the conditions of this potential rapprochement.

“Sabadell Bank confirms that it has received (…) a written proposal” of BBVA “for a merger“, indicated on its part this entity, the fourth Spanish banking group.

“The board of directors“from the group based in Alicante (southeast)”will adequately analyze all aspects of the proposal“, states in a short statement also sent to the CNMV.

The merger between the two entities would give rise to a large bank capable of rivaling Santander, the first Spanish bank with nearly 166 million clients in the world, or with large European banks, such as HSBC or BNP Paribas.

The big fish eats the little one

However, the announcement of their possible merger had an uneven reception on the Madrid Stock Exchange, where the shares of the Sabadell They closed with a rise of 3.37%, while those of BBVA lost 6.51%. According to analysts, this contrast is due to the imbalance of the operation.

“In this case, rather than a merger between equals, it seems that we are rather facing a takeover in which the big fish [BBVA] eats the little one [Sabadell]“, he opined Ricardo Zionprofessor of the EAE Business School of Barcelona, ​​for whom Sabadell – forced to grow to “survive”- has more to gain.

The two banks announced a first merger project in November 2020, with the aim of better resisting the economic crisis caused by the covid-19 pandemic.

This project was finally abandoned ten days later, due to lack of agreement.

In the months following that failed 2020 merger initiative, Sabadell undertook a vast restructuring plan aimed at reducing its costs, with almost 1,800 layoffs as a result. The same thing happened with BBVAwhich eliminated almost 3,000 jobs.

Strength of the Spanish banking sector

Both groups have since recovered, as has the Spanish banking sector as a whole, which posted record profits in recent months, despite an exceptional tax on financial groups introduced by the left-wing government to finance measures to support the economy. purchasing power.

Thus, the announcement of this possible resumption of negotiations comes one day after the publication of the results of BBVA, which recorded a net profit up 19% in the first quarter, thanks above all to the good results in Spain and Mexico .

He BBVAchaired by Carlos Torres Vila and born in the Basque Country (north), reported on Monday that it had obtained profits of 2.2 billion euros in the first quarter, 19% more than in the first three months of 2023.

Its net banking income – the equivalent of its business volume – increased by 15.4%, to 6,510 million euros.

The group Sabadellchaired by Josep Oliu, announced last week that it had generated a net profit of 308 million euros in the first quarter, 50% more than at the beginning of 2023. This is the highest quarterly profit in its history.

The Spanish banking sector experienced a first wave of consolidation during the 2008 financial crisis, with the virtual dissolution of the provincial savings banks, which went through great difficulties and were absorbed by the sector’s heavyweights.

This process continued in 2021 with the absorption of Bankia by Caixabankwhich created the third Spanish banking group, followed by the acquisition of Liberbank by Unicaja, which is now the fifth bank in the country.