Shares rise in Catalan bank Sabadell after BBVA merger offer

Shares in Catalan lender Banc Sabadell rose over 6% on Thursday, two days after BBVA announced its intention to start negotiations over a merger of the two banks.  

BBVA's shares, on the other hand, started the day in the red and fell by more than 2%, losing up to €10 per share. 

Plans for a merger emerged from BBVA on Tuesday and yesterday the Basque bank gave more details about its opening offer, including a 30% premium per share and a guarantee of "total commitment" to Catalonia. 

BBVA has also offered Sabadell three seats on its board of directors, one of them as vice president. 

Its proposal includes having two corporate headquarters, maintaining Sabadell's current offices in Sant Cugat, just outside Barcelona. 

BBVA says that it will maintain the Sabadell brand in areas where there is "relevant commercial interest." 

"The new entity would create one of Europe's largest and most robust financial entities, boasting over one trillion euros in assets and serving more than 100 million clients worldwide, with the ambition of becoming the largest bank by market capitalization of the Eurozone," BBVA said. 

"In addition, Banco Sabadell's presence in the United Kingdom would add to BBVA's global scale and its leadership in Mexico, Turkey and South America," their statement said. 

Sabadell was founded in the Catalan city of the same name in 1881, but moved its headquarters outside Catalonia during the  2017 independence push, reportedly under pressure from Spain's conservative government of the time.

Failed merger talks in 2020

In 2020, the two financial institutions already explored a merger, but the talks failed after two weeks of negotiations. 

Banc Sabadell's management board decided to reject a deal after "a disagreement over a potential exchange ratio of both firm's shares."

If the merger becomes a reality, it would make the bank the second-largest lender in Spain.

BBVA posts record Q1 profit

The news comes a few days after both banks announced their profits.

During the first quarter of 2024, BBVA made a profit of €2.2 billion, 19% more than the same period last year.

Banc Sabadell's profits reached 50%, earning €308 million in the first quarter of 2024.

On the stock market, BBVA has a capitalization of more than €60 billion, while Banc Sabadell exceeds €10 billion.