Spain: Banco Sabadell Rejects BBVA’s Improved Takeover Bid – What’s Next for the Banking Sector? (2025)

Why Did Sabadell Reject BBVA’s Improved Offer?

On October 1, 2025, Banco Sabadell’s board unanimously rejected BBVA’s revised takeover bid, calling it “significantly undervalued” despite a 12% premium over the initial proposal. Insiders suggest Sabadell’s strong digital banking performance (with a 23% YoY profit increase in Q2 2025) gave them negotiating leverage. “This isn’t just about price—it’s about strategic fit,” remarked financial analyst Clara Martínez from TradingView.

The Backstory: A Banking Rivalry Spanning Decades

The BBVA-Sabadell tension isn’t new. These Spanish giants have competed fiercely since the 1990s, particularly in SME lending. What makes this 2025 bid different? Post-pandemic digital transformation costs and rising interest rates have made consolidation tempting. BBVA reportedly wants Sabadell’s UK subsidiary TSB to strengthen its European foothold—a MOVE that could challenge Santander’s dominance.

Market Reactions: More Volatility Ahead?

Within hours of the announcement, Sabadell’s shares dipped 2.3% while BBVA gained 1.1%—a classic “bidder’s bounce.” Fixed-income markets reacted too, with Sabadell’s 2028 bonds tightening by 15 basis points. “The market’s pricing in either a higher bid or rival offers,” noted BTCC’s head of research, pointing to CaixaBank and Unicaja as potential dark horses.

Regulatory Hurdles: The Elephant in the Room

Even if terms were agreed, this deal WOULD face intense scrutiny. Spain’s competition watchdog recently blocked a smaller merger, fearing reduced SME lending competition. The ECB’s Single Supervisory Mechanism also monitors banking M&A closely post-Credit Suisse collapse. “Approval could require massive branch divestitures,” warned a former Bank of Spain official speaking anonymously.

What This Means for Customers and Investors

For everyday Spaniards, consolidation often means branch closures—over 5,000 shuttered since 2020. Investors eye different angles: BBVA’s tech stack could turbocharge Sabadell’s digital assets, while Sabadell’s 1.3 million loyal SMEs offer cross-selling goldmines. “This isn’t just a Spanish story—it’s about who leads European challenger banking,” said a London-based hedge fund manager.

The Road Ahead: Three Possible Scenarios

Industry watchers see these paths:

1. Higher Bid: BBVA could raise its offer by 8-10% before year-end
2. White Knight: A foreign bank (like Italy’s Intesa) might intervene
3. Status Quo: Both banks focus on organic growth amid regulatory uncertainty

Lessons From Past European Banking Mergers

History offers cautionary tales. The 2017 merger creating CaixaBank-Bankia required €5 billion in restructuring costs. Conversely, ING’s 2021 digital-focused acquisition of Germany’s Comdirect proved highly profitable. “Cultural integration is where most fail,” noted a Wharton School case study author.

Why This Matters Beyond Finance Circles

With Spain’s economy projected to grow just 1.7% in 2025, banking stability is crucial for recovery. SMEs—which Sabadell specializes in—account for 65% of Spanish employment. As one Barcelona bakery owner put it: “When big banks play chess, we’re the pawns.”

Expert Take: The Digital Transformation Angle

BBVA’s blockchain-based payment infrastructure could mesh well with Sabadell’s award-winning mobile app. “The real prize isn’t branches—it’s data,” argued tech consultant Miguel Ángel Díaz. Sabadell’s 4.8-star app rating (versus BBVA’s 4.3) gives pause about integration risks.