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Banco Sabadell launches takeover bid

Sat 26th Jun 2010

Banco Sabadell released a statement yesterday,that the board of directors had agreed to launch a takeover for Banco Guipuzcoano, in the first merger of it's kind between two listed Spanish banks since the financial crisis began.

Banco Sabadell are proposing five shares and five mandatory convertible bonds for every eight ordinary shares of Guipuzcoano.

Banco Sabadell is a nationwide lender, currently holding 84 billion euros in assets, and is Spain's 7th largest Bank.

Banco Guipuzcoano, based in the Basque region, will retain its legal identity and operate as a separate brand, and holds 10.3 Billion euros in assets.

Banco Sabadell's takeover bid is just a small part of the consolidation amongst Spain's regional saving banks, which have born the brunt of the collapse of the country property market at the end of 2008.

The government has encouraged the consolidation of many of the smaller, regional banks, which currently account for half of the lending in Spain, in order to maintain liquidity.

The Bank of Spain's proposal to tighten rules on provisions the lenders have to make against real estate assets on their balance sheets has added to the pressure on regional savings banks to merge.

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