BBVA has shared details of its merger proposal with Sabadell, a partnership that would see the consolidation of two of Spain’s biggest banks.
The proposal follows a 2020 merger attempt that ultimately did not go ahead. Through the mandate, BBVA will improve its standing in the Spanish small and medium enterprise segment and may integrate Sabadell’s Mexican presence may be integrated into BBVA-Bancomer.
In the new deal, BBVA is offering one new share for every 4.83 Sabadell’s share, with the expectation of earnings per share accretion beginning within year one reaching approximately 3.5% once full cost synergies are achieved. An estimated ROI of close to 20% is predicted, along with a 30 bps impact on common equity tier 1 (CET1), BBVA shared.
Morgan Stanley, which is acting as financial advisor to Sabadell, estimates a hypothetical 12.4% pro-forma CET1 post integration costs, modelling a theoretical €2.1 billion in charges net of tax.
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