Spanish banking group BBVA is in talks with the representatives of smaller rival Banco Sabadell for a potential merger.
The banks have confirmed the discussions to the National Securities Market Commission (CNMV) and added that the due diligence process has already begun.
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If the deal is successful, the new BBVA-Sabadell entity will have nearly €600bn ($710bn) in assets and a market value of €26.7bn in Spain, Reuters reported citing Refinitiv data.
Internationally, the combined company will have €860bn in total assets.
In a statement to CNMV, the bank said: “BBVA confirms that it is holding discussions with representatives of Banco de Sabadell, SA, with the authorisation of the Board of Directors, in relation to a potential merger between the two entities, having initiated a reciprocal due diligence process in customary terms in this type of operations and appointed external advisers.”
Banco Sabadell said: “Banco Sabadell confirms that it is holding discussions with representatives of Banco Bilbao Vizcaya Argentaria, SA in relation to a potential merger between the two entities, having started the due diligence process and appointed external advisers, with the authorisation of its Board of Directors.”
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By GlobalDataHowever, BBVA stressed that no decision has been made regarding the potential consolidation so far and a deal is still uncertain.
“BBVA will provide information in due time of any decisions that, as the case may be, might be made, when and in the manner required by law,” the bank stated.
According to the El Confidencial newspaper, BBVA has hired American banking giant JPMorgan Chase to advise on the acquisition of Sabadell.
Meanwhile, the TSB-owner is being advised by investment banking giant Goldman Sachs.
BBVA has also appointed Garrigues as its legal adviser, while Sabadell has hired Uría Menéndez, the El Confidencial newspaper said.
Recently, PNC Financial Services Group inked a definitive agreement to buy the US banking business of BBVA.
Under the agreement, PNC will pay $11.6bn in cash for the acquisition of BBVA USA Bancshares, including its US banking subsidiary BBVA USA.
BBVA Securities, Propel Venture Partners Fund I, LP and BBVA Processing Services are not a part of the acquisition.
