Shares of Banco de Sabadell SA fell 17% today after a Spanish bank said negotiations on a merger with a larger competitor, BBVA SA, were over – unsuccessfully.
The agreement would create an entity with a market cap of approximately € 27.5 billion ($ 32.76 billion). Shares of BBVA, which also confirmed the end of merger negotiations, rose by 2%.
Sabadell Bank said it would launch a new strategy in favor of its Spanish domestic business instead of merging.
“Sabadell is a far smaller bank in terms of size and assets, so the decision to suspend merger negotiations is even more mysterious. The bank saw its net income fall from € 1 billion in 2016 to just € 242 million over nine months and is clearly facing problems, ”said Michael Hewson, CMC Markets’ chief market analyst.