Spanish banks Sabadell, BBVA scrap merger plan
Spain's second-largest bank BBVA and smaller rival Banco Sabadell scrapped plans Friday for a tie-up that would have created a top player as the industry struggles in the economic fallout from the coronavirus pandemic.
The two banks announced on November 16 that they were in talks about a possible merger although they stressed there was no certainty that it would be implemented.
The talks were announced at the same time as BBVA said it had agreed to sell its US unit to PNC Financial Services for $11.6 billion, a deal which would mean the lender would not need a capital increase to carry out an operation involving Sabadell.
"Banco Sabadell informs that the board of directors has decided to terminate the... discussions because the parties have not achieved an agreement on the exchange ratio of both entities," Sabadell said in a statement.
BBVA's offer did not reflect the real value of its business, it added, without giving further details.
For its part, BBVA said in a separate, brief statement that "discussions about a merger with Banco Sabadell concluding without reaching an accord."
The end of talks is a setback to the bank consolidation underway in Spain, which has been encouraged by the country's central bank.
In September, Spain's
Caixabank and rival Bankia approved their merger into the country's biggest domestic lender in a move that transforms the landscape of Spanish banking.
Mid-sized lenders Liberbank and Unicaja, meanwhile, confirmed renewed merger talks in October. Banks across Europe are struggling to cope with record-low interest rates and the economic downturn sparked by the coronavirus pandemic, which has raised pressure on them to boost liquidity by selling assets or through tie-ups.
Spain has been one of the hardest-hit nations in Europe by the pandemic and the IMF sees the economy slumping by 12.8pc this year, one of the steepest declines among the world's advanced economies.