BBVA fails in €17bn takeover battle for smaller Spanish rival Sabadell

Lender BBVA has failed in its takeover bid for smaller rival Sabadell, bringing an end to the tumultuous Spanish banking drama.

Sabadell shareholders holding 25.47% of voting rights backed the offer, far short of the 50% needed for BBVA’s bid to succeed outright. If the proposal had received a backing over 30%, BBVA could have launched a second offer.

The news comes as a heavy defeat for BBVA chair Carlos Torres, who unsuccessfully bid for Sabadell in 2020. After another failed friendly attempt in April 2024, Torres then launched the hostile bid in May 2024.

BBVA's offensive unleashed a wave of political, business, and social backlash, especially in Catalonia. Sabadell was founded in this part of Spain, a region with a strong nationalist identity and a history of independence movements.

Sabadell moved its headquarters to Alicante in 2017 due to uncertainty over Catalonia's independence bid. In January this year, amid the offensive from BBVA, the board of Banco Sabadell then decided to move the headquarters back to Catalonia.

The Spanish government was also hostile to the proposed merger, arguing that it could threaten competition to the detriment of consumers. The state therefore placed conditions on the acquisition, blocking BBVA from merging fully with Sabadell for at least three years — if the deal went ahead.

While concerns mounted over unfair competition and potential job losses, those supporting the deal nonetheless stressed the advantages of banking consolidation in Europe.

By creating banking powerhouses, they argued that eurozone lenders would be better positioned to invest in innovation. Mergers can also allow lenders to combine expertise and therefore benefit consumers, provided that market competition remains healthy.

Even so, Spain is not the only European nation where banking takeovers are failing to gather momentum.

Italian lender UniCredit withdrew its offer to buy smaller rival Banco BPM in July following opposition from the Italian government. UniCredit is also bidding for German lender Commerzbank, although Commerzbank’s board — as well as politicians in Berlin — are strongly opposed to the deal.

Reacting to the failure of BBVA’s bid, Torres said: “Looking ahead, our strategic plan and financial objectives for the 2025-2028 period will keep us at the forefront of European banking in terms of growth and profitability.”

BBVA also announced a significant share buyback and an interim dividend.