BBVA Revises Synergy Expectations in Sabadell Acquisition Deal

Revised Synergy Estimates Fall Short of Target

BBVA has recalculated the expected synergies from its proposed acquisition of Banco Sabadell, projecting approximately €300 million in cost savings. Internal sources indicate that the bank explored various scenarios in an effort to raise this figure to €500 million, but ultimately could not reach that goal. Official sources from the bank have declined to comment on the matter.

Out of the €300 million in projected synergies, €100 million would come from capital funds, although Sabadell CEO César González-Bueno recently argued these savings have been offset by a four-time improvement in Sabadell’s credit ratings. The remaining savings are expected to stem from reductions in administrative expenses and the integration of technology platforms.

Potential in Tech and Commercial Integration

BBVA plans to consolidate various technological tools used across both institutions, including reporting and analytics platforms, internal communication systems, collaboration software, information portals, and customer relationship management tools.

The bank also sees room for additional synergies through commercial agreements that could include volume-based discounts, known as “rappels.” While these agreements may be limited in number, BBVA believes that the combined purchase volumes — even with Sabadell maintaining operational autonomy — could unlock further savings.

Initial Synergy Forecast Faced Regulatory Roadblocks

Prior to government intervention, BBVA projected annual synergies of €850 million from the Sabadell integration. These included €450 million in technology and administrative cost reductions, €350 million in workforce-related savings, and €100 million in financial expenses.

However, the Spanish government has prohibited BBVA from initiating mass layoffs or closing a significant number of bank branches as part of the deal. Despite these restrictions, the regulatory veto does not cover technology platforms, giving BBVA some leeway to achieve cost efficiencies in that area.

BBVA Submits Updated Takeover Prospectus to CNMV

On Monday, BBVA submitted an updated version of the takeover prospectus to Spain’s stock market regulator, the CNMV (Comisión Nacional del Mercado de Valores). According to financial sources, the revised prospectus includes minor changes to the price and payment structure for the acquisition of Sabadell, although the adjustments are not considered substantial. The specific content of the updated document remained undisclosed before markets opened on Tuesday.

The update was necessary due to several key developments in the acquisition process. In late June, the Spanish government approved the takeover but added new conditions beyond those already set by the national competition authority (CNMC), including a ban on merging the two banks for at least three years, extendable by another two years.

Sale of TSB and Extraordinary Dividend Proposal

Another significant development occurred last week, when Sabadell finalized the sale of its UK subsidiary, TSB, to Banco Santander. This deal is pending approval from Sabadell’s general shareholders’ meeting. The bank has also proposed distributing a substantial dividend of €2.5 billion using proceeds from the sale.

Regulator’s Timeline and Expectations

Carlos San Basilio, president of the CNMV, addressed the media on Monday during a forum hosted by Cecabank, stating that the regulator expects to receive a first version of the updated prospectus this week. He added that the goal remains to approve the document before the end of July.

San Basilio explained that the upcoming shareholder meeting would create two possible outcomes — one where the TSB sale and dividend are approved and another where they are not — and both should be clearly reflected in the final prospectus.

“We still aim to approve the prospectus before Sabadell’s shareholders’ meeting. Ideally, we want to finalize it by the end of July, as the scenarios are well understood. However, the timeline ultimately depends on BBVA,” San Basilio noted.

Final Clarifications on Synergies Still Pending

The updated prospectus will also need to clarify the revised synergy estimates. Initially, BBVA projected €850 million in annual synergies — €300 million in personnel costs, €450 million from technology and administration, and €100 million in financing. While these figures were never formally revised, BBVA has consistently stated that it aims to preserve most of these savings, even under changing conditions.