Spanish banks BBVA, Sabadell in merger talks

Spanish bank Banco Bilbao Vizcaya Argentaria (BBVA) and its smaller rival Banco Sabadell said on Monday they are in merger talks to potentially create Spain’s second-biggest domestic lender by assets.

Earlier on Monday, BBVA said it had agreed to sell its US business to PNC Financial Services Group Inc for $11.6 billion in cash.

The PNC deal prompted speculation BBVA could use the money to buy a smaller rival.

A BBVA-Sabadell merger would be just the latest move in the accelerating consolidation of the Spanish banking sector.

In September, Caixabank agreed to buy Bankia for €4.3 billion in an all-share deal.

Sabadell, which owns TSB in the UK, has a stock market value of roughly €2.3 billion compared with BBVA’s €24.5 billion.

BBVA Group executive chairman Carlos Torres Vila said of his US transaction: “This is a very positive transaction for all sides.

“PNC has recognized the great value of our unique client franchise and of our great team in the US, who will be part of a leading financial services group in the country.

“The deal enhances our already strong financial position.

“We will have ample flexibility to profitably deploy capital in our markets strengthening our long-term growth profile and supporting economies in the recovery phase, and to increase distributions to shareholders.”