BBVA & Banco Sabadell Merger Called Off Early

The proposed merger between BBVA and Banco Sabadell have been scrapped less than two weeks after the tie-up was announced.

The initial discussions have apparently collapsed after the two banks disagreed over the proposed share price for the merger.

The Catalan Banco Sabadell, has a market capitalisation  of 2.3 billion euros, 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.

There is speculation this could mean the sell off of it´s UK TSB operation.

In a press statement Banco Sabadell said 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.’

BBVA´s press statement said that ‘discussions about a merger with Banco Sabadell were concluding without reaching an accord’.

Sabadell’s shares fell 10% on Friday, while BBVA’s rose 2.3%.

A tie-up for the two Spanish banks would’ve been viewed as a crucial round of consolidation at a time when the Spanish economy faces contraction for 2020 and an uncertain 2021 in the wake of the coronavirus economic fallout.

BBVA, with a market cap of 24.5 billion Euros is in a stronger position after the recent sell off of it´s US operation to PNC Financial for nearly $12 billion.