By Mauro Orru


Banco Bilbao Vizcaya Argentaria laid out terms for its proposed merger with smaller rival Banco de Sabadell, part of plans to create one of the largest financial institutions in Europe.

The Spanish lender said in a letter addressed to Sabadell's board of directors that a tie-up would create a banking behemoth with more than 1 trillion euros ($1.067 trillion) in assets and more than 100 million customers globally.

The resulting bank would rank No. 1 by assets in Spain and among the biggest in Europe, with the ambition to become the largest bank by market capitalization in the euro area.

BBVA and Sabadell have considered a merger before. In 2020, talks were called off after disagreements over pricing.

Now, BBVA said it would offer one newly issued share for every 4.83 Sabadell shares, an exchange ratio representing a 30% premium over the closing prices of BBVA and Sabadell on April 29. Banco Sabadell shareholders will command a 16% stake in the group following the merger.

BBVA said the deal would also benefit its existing shareholders, boosting earnings per share from the first year after the merger, offering a return on invested capital close to 20% and generating savings of roughly EUR850 million before taxes.

Sabadell's presence in the U.K. would expand BBVA's scale and operations in Mexico, Turkey and South America. BBVA said the combined group would be more profitable and better equipped to reach more customers, particularly in terms of assets, loans and deposits.


Write to Mauro Orru at mauro.orru@wsj.com


(END) Dow Jones Newswires

05-01-24 0738ET