Banco Sabadell agrees to acquire smaller rival

Spanish bank Sabadell said on Saturday its shareholders have agreed to its takeover bid for its smaller peer Guipuzcoano, in Spain's first tie-up between listed banks since the financial crisis began.

The friendly bid will allow Sabadell, a mid-sized Catalan bank, to grow 12 percent in assets and 14 percent in deposits with the takeover of Guipuzcoano, a small bank based in Spain's Basque Country worth 675 million euros on the stockmarket.

"The deal will allow us to improve our footprint in the Basque country, Navarre and Madrid and obtain considerable cost savings of about 60 million euros per year when the tie-up is complete" Sabadell chairman Josep Oliu told shareholders.

Spain's listed banks have largely escaped the takeovers and government intervention seen in other European countries, due to their relatively small exposure to the United States sub prime mortgage crisis which preceded the global financial crisis.

Spain's own property bubble imploded later than the United States', but the resulting surge in bad loans eroded smaller banks' capital ratios in the same way, forcing many small unlisted savings banks in its fragmented financial services sector to merge.

Sabadell plans to offer five of its own shares and five convertible bonds for each eight Guipuzcoano shares it receives, valuing the Basque bank at 750 million euros.

Holders of nearly 46 percent of Guipuzcoano shares have already agreed to accept Sabadell's offer, which is conditional on winning acceptances from holders of 75 percent of the Basque bank's shares.

Sabadell will use the 2.5 percent of its own shares it holds as treasury stock and issue up to 63 million new shares together with 468 million euros of convertible bonds to fully acquire Guipuzcoano.

Once the deal is complete, it will take a maximum of six months to fully integrate the two banks, Oliu said.