Sabadell gained more than 7%, after BBVA confirmed that it is interested in allying with the Spanish bank. If the two merge they will be able to compete with the largest bank in the neighboring country, Santander.
Spanish bank BBVA confirmed this Tuesday that it contacted its rival Sabadell to study a potential merger, in a statement to the Spanish regulator CNMV. The announcement led Sabadell shares to climb more than 7% during the day.
“In relation to the news published today in the press, BBVA confirms that it communicated to the Chairman of the Board of Directors of Banco de Sabadell, the interest of the Board of Directors of BBVA in starting negotiations to explore a potential merger between the two entities”, wrote the bank, also ensuring that it has already appointed consultants to evaluate the operation.
Sabadell also confirmed, in a separate statement, that it had received an “indicative written proposal” for a merger.
“At XTB we evaluate the operation positively”, points out the company in a note to which the business had access, explaining that “the delay in lowering interest rates will allow the bank to continue increasing its profits and a way of continuing to maintain the current level of income without depending on interest rates, thus diversifying your income and increasing its size”.
This is because smaller banks, such as Sabadell, have been able to make high profits due to the increase in interest rates. However, when these start to fall, they could affect the profits of these banks
After publication, Sabadell rose by more than 7%.
On the contrary, BBVA lost more than 7% and Santander also fell more than 3% during the day.
If the deal goes through, it will create yet another Spanish banking giant, capable of rivaling the country’s largest bank, Santander. The potential new bank will have a market capitalization of around 70 billion euros — 60 billion euros from BBVA and 10 billion euros from Sabadell —, with Santander having a capitalization of around 70 billion euros .
The two banks had previously spoken to move forward with a merger, but the talks had failed due to disagreements over the valuation.
