Spanish stock market supervisor assesses BBVA's application for $13 billion Sabadell deal

By Jesús Aguado

MADRID (Reuters) -Spain's stock market supervisor said on Tuesday it has started assessing BBVA's 12.28 billion euro ($13.19 billion) hostile takeover bid for Sabadell, a potential tie-up that Madrid opposes.

The National Securities Market Commission (CNMV) said it had admitted BBVA's application for authorising the deal, which is part of its regulatory process for approving deals.

"The admission for processing of the application does not imply any type of pronouncement on the decision concerning the authorisation of the takeover bid," the supervisor said in a statement.

The deal also requires approval from the European Central Bank and Spanish antitrust watchdog CNMC.

Last month, Sabadell rejected BBVA's all-share offer, prompting Spain's second-largest bank to go hostile in its latest attempt to buy the country's fourth-largest lender after a failed attempt in 2020.

The combined group would overtake Caixabank as Spain's biggest bank by domestic assets, in the latest chapter of a consolidation drive in the Spanish banking sector.

The Spanish government opposes the planned merger as it considers the combination of the two banks would have potentially harmful effects on the Spanish financial system and would impact jobs and customers.

Before formally going to shareholders, BBVA will be trying to convince regulators of the merits of its offer.

BBVA expects the regulatory process and the tender period to take up to eight months.

On Monday, BBVA's Chair Carlos Torres urged shareholders to participate in an extraordinary meeting on July 5 called to approve a share issue to fund the bid for Sabadell.

In a note to clients on Tuesday, broker Keefe, Bruyette & Woods said the offer would help BBVA by reducing its exposure to emerging markets.

"Some investors continue to think that BBVA should not be pursuing M&A, but we think Mr. Torres deserves to be trusted on this," the broker said.

It recommended BBVA shareholders approve the capital increase at the EGM.

Since April 29, the day before BBVA first announced its interest in exploring a potential merger with Sabadell, shares in BBVA have fallen by 12%, while Sabadell shares have risen by about 7%.

($1 = 0.9308 euros)

(Reporting by Jesús Aguado, editing by Inti Landauro, Shinjini Ganguli, Tomasz Janowski and Susan Fenton)