Banco Bilbao Vizcaya Argentaria (BBVA) has secured approval from the UK Prudential Regulation Authority (PRA) to acquire indirect control of Banco Sabadell’s British banking subsidiary TSB Bank.
The approval is one of the key requirements needed to complete its previously announced €12bn bid for Banco Sabadell. This would see the British bank integrated into BBVA upon completion of the acquisition.
BBVA’s all-share offer was initially rejected by Banco Sabadell in May 2024. This was followed by opposition from the Spanish government citing that the transaction could create uncertainty in the financial market.
However, BBVA later received necessary authorisations for the transaction from regulators in several countries where Banco Sabadell has a presence, including the US, France, Portugal and Morocco.
The acquisition still requires approval from the European Central Bank and the Spanish Securities Market Commission (CNMV).
Additionally, BBVA’s offer is subject to the acceptance of a majority of the social capital of Banco Sabadell, with a minimum of 50.01%, and clearance from the Spanish competition regulator, the the National Commission on Markets and Competition (CNMC).
BBVA offers one of its shares for every 4.83 shares of Banco Sabadell. This reflects a premium of 30% over the closing price of both banks on 29 April 2024.
Upon the closing of the deal, BBVA expects to become Spain’s second-largest financial institution. The deal will mark the latest significant consolidation in the Spanish banking industry.
The proposed merged entity would have a greater capability to grant credit, with an additional €5bn per year in loans to provide to families and businesses.
Furthermore, the combination of BBVA and Banco Sabadell is expected to create a bank with more than €1 trillion in total assets.
In July 2024, 96% of BBVA shareholders cast a vote in favour of the capital increase needed to extend the company’s offer to Banco Sabadell shareholders.
