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Spain's BBVA walks away from merger with Banco Sabadell after confirming tie-up less than two weeks ago

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BBVA head-office building in Bilbao. Discussions collapsed after the banks disagreed over the pricing of the deal.

  • 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.
  • Visit Business Insider’s homepage for more stories.

Spanish lenders BBVA and Banco Sabadell have scrapped plans to merge after confirming a tie-up less than two weeks ago.

Discussions collapsed after the banks disagreed over the price of the transaction. Sabadell, which has a market cap of 2.3 billion euros ($2.7 billion), said it would launch a new strategy to prioritize 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’ve been viewed as a crucial round of consolidation at a time when European lenders face financial challenges related to the pandemic-induced economic fallout.

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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 ($29.2 billion), is not short of other options. After agreeing to sell its US operations to PNC Financial for nearly $12 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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