US News Spain: BBVA and Sabadell abandon their merger project

15:45  27 november  2020
15:45  27 november  2020 Source:   latribune.fr

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Spanish lenders BBVA and Banco Sabadell on Friday called off merger talks after failing to reach an agreement on the financial terms of the potential transaction. 16 announced merger talks aimed at creating Spain 's second-biggest domestic bank with almost 600 billion euros in assets.

Banco de sabadell , s.a.

Les deux banques avaient annoncé le 16 novembre ce projet de fusion, dont le but était de les aider à mieux résister à la crise économique née de la pandémie de Covid-19. © Provided by La Tribune The two banks announced on November 16 this merger project, the aim of which was to help them better withstand the economic crisis resulting from the pandemic of Covid-19.

Thunderbolt in the Spanish banking sector: Sabadell and BBVA announced on Friday the abandonment of their merger project, an operation intended to help them cope with the crisis and which would have given birth to a juggernaut.

In a brief statement, Sabadell, the country's fifth largest bank, claims to be behind the breakdown in negotiations.

"The board of directors of Banco Sabadell has decided to put an end to these discussions, the parties not having reached an agreement on the possible exchange of shares between the two entities", explained the bank.

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Signs sit outside a Banco Bilbao Vizcaya Argentaria SA ( BBVA ) bank branch in Madrid, Spain . BBVA and smaller rival Sabadell said on Monday they are in talks to create Spain 's second-biggest domestic lender by assets, the latest move in the accelerating consolidation of the Spanish banking

MADRID, Nov 26 (Reuters) - Merger talks between Spanish lenders BBVA and Banco Sabadell have stalled and could potentially fall apart over disagreements on the price BBVA could pay for its smaller rival, Spanish newspaper El Economista said on Thursday.

Concretely, Sabadell considered that the offer made to him by BBVA was insufficient and did not correspond to the value of the bank. No figures were available regarding the amount of this offer.

For its part, BBVA, Spain's second largest banking group, simply indicated in a separate, equally brief statement that "the conversations about a potential merger transaction with Banco Sabadell were concluded without an agreement. has been achieved ".

On the Madrid Stock Exchange, this announcement caused the Sabadell share to plunge 12.28% to 0.3528 euro, around 9:00 GMT. The BBVA title increased by 2.41% to 3.8610 euro.

The two banks announced on November 16 this merger project, the aim of which was to help them better resist the economic crisis born from the Covid-19 pandemic.

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Sabadell will also analyse strategic alternatives for creating shareholder value with regard to the group’s international assets, including TSB. The new strategy details will only be revealed in the first quarter, and in the meantime it raises questions about what a “strategic alternative” for TSB looks like.

However, BBVA stressed its own plans for Sabadell are far from a done deal. Spanish banks also stand out for their low levels of capitalisation. At the end of last year, the four big European banks with the lowest ratios of tier one capital were Santander, Sabadell , BBVA and CaixaBank, according to a

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A few hours earlier, BBVA had announced the sale of its subsidiary in the United States to the American group PNC Financial Services for nearly ten billion euros .

The transaction was interpreted as being linked to the consolidation process in the Spanish banking sector, knowing that a merger between BBVA and Sabadell would have taken the form, in practice, of a takeover of the latter by the former.

Boiling banking sector

The Spanish banking sector, which has already seen dozens of banks disappear as part of mergers during the 2008 financial crisis, has been in turmoil since the announcement in September of the takeover of Bankia, the fourth largest bank in the country, by CaixaBank, the third .

The marriage between these two entities must give birth to the first bank in the country in terms of assets in Spain. If it had seen the light of day, the new entity resulting from the takeover of Sabadell by BBVA would have been located just behind.

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Find the latest Banco Bilbao Vizcaya Argentaria ( BBVA ) stock quote, history, news and other vital Estimated return represents the projected annual return you might expect after purchasing shares in Both BBVA and Sabadell (ES:SAB) said the talks were ongoing and no decision had been made on

Banco de Sabadell , S.A. (Catalan: Banc Sabadell ) is a Spanish multinational financial services company headquartered in Alicante, Spain . It is the fifth-largest Spanish banking group.

Smaller in Spain, Santander remains, on the other hand, the largest Spanish bank due to its strong international presence.

Encouraged by the ECB and the Bank of Spain, the main aim of this concentration is to help Spanish banks, which suffered greatly from the 2008 crisis, to cope with the new crisis linked to the coronavirus pandemic.

The new Spanish banking landscape must be complemented by a possible merger between Liberbank and Unicaja, both medium-sized, which have been negotiating since October.

Country among the most affected by the health crisis, Spain is expected to experience the biggest decline in GDP in Western countries in 2020, with a drop of 12.8% according to the latest forecasts from the International Monetary Fund (IMF).

A plunge in the economy which inevitably leads to an increase in bad debts of companies and individuals.

Sabadell refocuses on Spain

After announcing the termination of its negotiations with BBVA, Sabadell unveiled the future implementation of a new strategic plan focused on the domestic market.

This plan will be announced in the first quarter of 2021, the bank said. But Sabadell is already revealing that he will understand the expansion of his program to cut costs and transform his retail banking business in Spain.

On November 10, the bank announced to the unions its intention to cut 1,800 jobs, or nearly 11% of its workforce in Spain, according to the Workers' Commissions union.

The group is also considering the sale of assets abroad and indicates on this subject that it will "analyze with its advisers strategic alternatives for creating value in relation to the group's international assets, including TSB", its subsidiary in the United Kingdom.

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