- BBVA, Spain’s second-largest bank, and smaller rival Banco Sabadell have walked away from a planned merger after a price disagreement.
- The two lenders had confirmed a tie-up less than two weeks ago.
- Sabadell had been looking to merge with another Spanish bank for months.
- But BBVA said it’s in no rush to scale its operations since it already has 15% of Spain’s market share.
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Discussions collapsed after the banks disagreed over the price of the transaction. Sabadell, which has a market cap of 2.3 billion euros ($US2.7 billion), said it would launch a new strategy to prioritise its domestic business after the two parties failed to reach an agreement on the exchange ratio of their shares.
Sabadell’s shares fell 10% on Friday, while BBVA’s rose 2.3%.
The objectives of its new strategy are expected to be released in the third quarter of 2021. Sabadell was keen on merging with another Spanish bank for months. A tie-up for the two lenders would have been viewed as a crucial round of consolidation at a time when European lenders face financial challenges related to the pandemic-induced economic fallout.
If the banks had merged, they would have accounted for about 20% to 25% of Spain’s domestic market loans, deposits, and mutual funds, according to the FT.
BBVA, with a market cap of 24.5 billion euros ($US29.2 billion), is not short of other options. After agreeing to sell its US operations to PNC Financial for nearly $US12 billion, Spain’s second-largest lender told the FT it is no rush to scale its operations because it commands 15% of Spain’s market share.
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