(Bloomberg) -- BBVA’s hostile takeover bid for rival Banco Sabadell has been approved by a UK supervisor, one of several key regulatory hurdles it needs to clear before Sabadell shareholders can vote on the deal.
With the authorization, the UK’s Prudential Regulatory Authority gave BBVA a green light to take indirect control of TSB Bank Plc, Sabadell’s subsidiary in the country, BBVA said in a statement. That authorization is “a necessary step to complete” the potential acquisition, BBVA said.
Spain’s second-biggest lender, whose official name is Banco Bilbao Vizcaya Argentaria SA, made a hostile approach for Sabadell about four months ago. The deal would create a banking giant with more than €1 trillion in assets and lead to cost savings and funding advantages, BBVA has said.
The offer needs to be authorized by numerous regulators before Sabadell’s shareholders get to decide if they want to accept it. The process is likely to take at least until the end of this year, BBVA has said.
Sabadell has rejected the proposal, saying the offer of one newly issued BBVA share for every 4.83 Sabadell shares undervalues the firm. The offer also underestimates the involved restructuring costs, it has said.
The Spanish government has said it’s opposed to the deal too as it could further reduce competition in a market already seen as dominated by a few banks.
Authorities in the US, France, Portugal and Morocco — countries where Sabadell operates as well — have also approved the offer, BBVA said in the statement. It still needs approval from the European Central Bank and Spain’s National Securities Market Commission, it said.
(Adds context about Spanish government’s stance in sixth paragraph.)
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