Spanish lenders BBVA and Banco Sabadell have called off merger talks after failing to agree financial terms, prompting Sabadell to consider options for its British unit TSB.
The two banks had announced the talks on Nov. 16 as they looked for a deal to create Spain’s second-biggest domestic bank with almost 600 billion euros ($715.3 billion) in assets. But two days later, BBVA Chief Executive Onur Genc had said he was in no rush and the bank had other options.
“Banco Sabadell informs that the board of directors has decided to terminate the above-mentioned discussions, because the parties have not achieved an agreement on the exchange ratio of both entities,” Sabadell said in a statement on Friday.
BBVA confirmed in a statement that the talks were over.
Genc had said the potential acquisition of Sabadell would be in direct competition with BBVA’s intention to undertake a sizeable share buyback programme.
No details of the financial disagreement were disclosed by the lenders on Friday.
On Thursday shares in Sabadell fell 5.4%, leaving it with a market valuation of 2.26 billion euros, after newspaper El Economista reported that negotiations had stalled over the price and could be derailed.
The paper said BBVA was willing to pay in cash, as demanded by Sabadell, but was not considering a substantial increase on a potential offer of close to 2.5 billion euros.
The end of the talks is expected to put more pressure on Sabadell, which had been seen as the weaker link in the potential transaction.
On Friday Sabadell said it would focus on developing a new plan with a priority on its domestic market, which it said would be announced in the first quarter.
Among other measures, Sabadell said it would consider extending its efficiency and transformation programme in Spain and will analyse “strategic alternatives for creating value with regard to the group’s international assets, including TSB”.
Before entering formal negotiations with BBVA, Sabadell had already been focusing on an efficiency plan in Spain and at TSB. ($1 = 0.8388 euros)
Reporting by Jesus Aguado Additional reporting by Emma Pinedo and Inti Landauro Editing by Ingrid Melander and David Goodman