The Spanish owner of TSB, one of Britain’s biggest high street lenders, was on Tuesday at the center of speculation that it is being targeted for a takeover by giant banking group BBVA.
Sky News understands that BBVA is in the early stages of working with consultants on evaluating a potential all-share offering for Sabadell.
City sources said JP Morgan investment bankers were advising BBVA on its interest in Sabadell, and UBS would also be involved as a consultant.
It was unclear whether any formal approach had yet been made by BBVA to its smaller rival, although one source said highly preliminary talks had taken place between executives at the top of the two institutions.
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If confirmed, a takeover would create a Spanish-based banking giant with a market capitalization of more than €72 billion (£61.5 billion).
It would also raise new questions about the future ownership of TSB, which Sabadell has considered selling in the past.
In 2021, however, it rejected an offer from TSB from the Co-operative Bank – which is now in the process of being acquired by Coventry Building Society.
BBVA has a relatively limited presence in the UK, although it owns a large stake in Atom Bank, the digital-only lender.
The two Spanish banks held merger talks in 2020, but talks collapsed due to a disagreement over the price.
BBVA was contacted for comment, while a spokeswoman for Sabadell denied that it was in talks with its biggest rival or that it had hired consultants in relation to a combination with BBVA.
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