Spain’s Banco Sabadell has rejected a merger proposition from domestic rival BBVA.

The €12 billion merger proposition, revealed last week, would have created a Spanish banking giant with a balance sheet of €70 billion and create a major competitor to the country’s leading bank, Santander.

Sabadell however has told the National Securities Market Commission (CNMV), Spain’s stock market supervisor, that its board turned down the ‘unsolicited’ offer.

In a statement to the CNMV, the bank said: "The board believes that the proposal significantly undervalues the potential of Banco Sabadell and its standalone growth prospects. Furthermore, the recent material decline and volatility in the BBVA share price increases the uncertainty around the value of the proposal.”

It currently remains unclear if BBVA will make a follow up attempt to acquire the bank.

The pair held discussions over a merger in 2020, but talks broke down in November as neither could settle on terms. A difference in valuation of TSB at the time was said to be the main roadblock, with Sabadell’s board refusing to accept less than €3 billion after spending £1.7 billion on the British bank in 2015.

Sabadell did subsequently explore a sale for TSB, but ultimately kept a hold of the UK high street bank.

Spain’s banking sector has undergone a major period of consolidation since the 2008 global financial crisis, with the country’s number of banks reduced from 55 to just 10.

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