By Joshua Kirby
Shares in Banco de Sabadell SA traded higher in opening trade Tuesday, while its peer Banco Bilbao Vizcaya Argentaria SA traded down, following news that the two Spanish banks were in talks over a tie-up.
BBVA said Monday that the pair had started a due-diligence process and appointed external advisors ahead of a potential merger.
The announcement came the same day as news that BBVA had agreed to sell its U.S. subsidiary to PNC Financial Services Group Inc. for $11.6 billion.
Shares in Banco de Sabadell at 0850 GMT were up 2.5% at EUR0.43, while BBVA shares were down 4.2% at EUR3.50.
BBVA's sale of its U.S. subsidiary will ease a potential Sabadell tie-up by precluding the need to raise any further capital, analysts at Jefferies said in a note. A deal would be strategically reasonable, as it would give BBVA a broader SME footprint and a wider spread of market share across Spain's regions, Jefferies said.
Potential complications include Sabadell's ownership of U.K. lender TSB Bank and competition issues in the region of Catalonia, Jefferies said. Nonetheless, Jefferies estimates a 19% accretion to BBVA's earnings per share in case of an all-share deal.
News of the potential tie-up comes in the wake of a merger agreement earlier this year between two other Spanish lenders, CaixaBank SA and Bankia SA.
Write to Joshua Kirby at email@example.com; @joshualeokirby
(END) Dow Jones Newswires