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BBVA and Sabadell confirm to the CNMV that they are negotiating their merger

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BBVA Y Sabadell Bank have confirmed to the National Securities Market Commission (CNMV) that they are negotiating their merger, an operation that Bolsamanía already anticipated on September 9, after the announcement of the merger between CaixaBank Y Bankia. Both entities would manage assets in Spain worth 600,000 million euros and would lead to the second largest bank in the Hispanic market (behind CaixaBank + Bankia)

"BBVA confirms the holding conversations with representatives of Banco de Sabadell, with the authorization of the Board of Directors, in relation to a potential merger operation between both entities, having started a review process (due diligence) reciprocal in customary terms in this type of operations and appointed external advisers, "said BBVA, which has hired JPMorgan as an advisor.

Minutes later, Sabadell has sent another similar relevant fact to the CNMV to also confirm those negotiations between the two entities, which added that "no decision has been taken in relation to this potential merger operation and that there is no certainty that it will be adopted nor, in that case, on the terms and conditions of a possible operation ".

If the merger between BBVA and Sabadell goes ahead, the resulting entity would be the largest in Spain and would be placed ahead of the future CaixaBank (after the absorption of Bankia) and would relegate Santander to third position. Sabadell has signed Goldman Sachs to act as an interlocutor in the negotiations.

OPERATION IN USA

The confirmation to the CNMV has occurred after a day of heart attack. BBVA confirmed early the sale of its business in the US to PNC Financial Services for 9.7 billion euros, a price that has exceeded all forecasts and it has caused a great stock market revaluation for BBVA, which has closed with a rise of 15%.

In parallel, the Sabadell titles they shot in the bag from the first hour (the stock has ended with gains close to 25%) because investors already took a corporate transaction with BBVA for granted (which in practice will end up being an absorption). Finally, after the market closed, the operation was confirmed.

IT WOULD ADD ALMOST 10,000 OFFICES AND 148,000 EMPLOYEES

With data from the third quarter of 2020, the entity resulting from the merger between BBVA and Banco Sabadell would give rise to a group with global assets of 963,108 million euros (727,014 million from BBVA and 236,094 from Sabadell), a total of 9,769 offices in the geographies in which it operates (7,565 from BBVA and 2,204 from Sabadell) and 148,028 employees.

In Spain alone, the merged bank would have assets of 596,481 million euros (403,527 million from BBVA and 192,954 million from Sabadell), standing immediately behind the new CaixaBank after its merger with Bankia (both entities add 625,115 million assets in Spain with data from September 2020) and leaving Santander in third position.

SYNERGIES IN SPAIN

Likewise, the entity resulting from the eventual operation would have 4,225 offices in Spain (2,521 from BBVA and 1,704 from Sabadell) and with 45,866 employees (29,475 from BBVA and 16,391 from Sabadell), a high volume that would allow to gain synergies while reducing costs.

As for the plans updated a few weeks ago, BBVA announced that it maintained its intention to close 160 offices in Spain this year (It has already closed 121) and that the trend of reduction of the workforce would be the same as in previous years (in the last twelve months, 758 employees left BBVA Spain).

On his side, Sabadell is in negotiations with the unions to undertake a Employment Regulation File (ERE) that will affect a maximum of 1,800 employees.

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