BBVA presents an offer to shareholders of Banco Sabadell

“We present to the shareholders of Banco Sabadell a extraordinarily attractive offer create a larger bank in one of our most important markets,” said BBVA President Carlos Torres Vila. “Together we will have a greater positive impact in the geographies where we operate, with an additional lending capacity of 5 billion euros per year in Spain.”

BBVA’s attractive offer to Banco Sabadell shareholders contains the same financial merger conditions as those proposed to its board of directors on April 30: an exchange of one newly issued BBVA share for 4.83 shares of Banco Sabadell, which Who represents a premium¹ of 30 percent to the closing prices of the two banks on April 29; 42 percent compared to last month’s weighted average prices; or 50 percent compared to the weighted average prices of the last three months. Additionally, Banco Sabadell shareholders will own a 16.0 percent stake in the resulting entity, benefiting from the value generated by the transaction.

The transaction also represents a a clear creation of value for BBVA shareholders. According to BBVA estimates, this transaction is positive in terms of earnings per share (EPS) from the first year after the subsequent merger of the two entities, with an improvement of approximately 3.5 percent once the savings linked to the materialization merger, which are estimated at around 850 million euros before taxes. Additionally, the tangible book value per share improves by approximately 1 percent on the merger date. The operation offers a high return on investment (ROIC² close to an additional 20% for BBVA shareholders). All this, with a limited impact on the CET1 capital ratio, of around -30 basis points³. BBVA will maintain an increasing and attractive shareholder distribution policy, which currently consists of distributing between 40 and 50 percent of profits, combining cash dividends and buybacks. The bank will also remain committed to distributing any excess capital above 12%⁴.

The transaction will be also benefits all remaining stakeholders. Customers will have access to a unique value proposition, thanks to complementary franchises, an expanded product offering and the bank’s global reach. Employees will benefit from new professional opportunities to progress in a global bank. Creating a stronger, more profitable institution will also mean more funding for businesses and families and more contribution through taxes. All this will translate into greater economic and social progress.

“All stakeholders will benefit from this operation,” said Onur Genç, CEO of BBVA. “Banco Sabadell has done an excellent job, with remarkable progress in recent yearsand now its shareholders can join an entity offering a combination of growth and profitability unprecedented in Europe.

BBVA maintains its commitment in all the markets in which it operates and, from a position of greater strength, it will increase its support to businesses, as well as to the cultural, scientific and social sectors through its banking activity and its foundations. The new bank will have dual operational headquarters in Spain: one at the Banco Sabadell headquarters in Sant Cugat del Vallès (Barcelona) and the other at Ciudad BBVA, in Madrid. BBVA considers that the integration of the two entities also increases the potential of Barcelona as a European hub for startups. Use of the Sabadell brand will continue to be used in conjunction with the BBVA brand in regions or businesses in which it can have a significant commercial impact.

After the transaction closes, BBVA will be the second financial institution in Spain, one of the most relevant markets for the Group and with good future prospects. In this sense, the expected growth of Spanish GDP is higher than that of the average of the Eurozone countries (expected growth of 2.1% in 2024 and 2% in 2025, compared to an average growth of the Eurozone of 0. 7% and 1.4%, respectively). Furthermore, we have seen a significant deleveraging of families and businesses since the 2008 crisis, with current debt levels lower than those of the euro zone. All this, combined with an environment in which interest rates, although expected to fall, will remain at reasonable levels for banking activity, constitute growth levers for the financial system. Spain is also a market with attractive profitability. BBVA Spain had a profitability⁵ of 19% at the end of 2023.

With data at the end of 2023, the resulting entity displays a credit investment of 265 billion euros and a loan market share close to 22 percent in the Spanish market (13.8 percent for BBVA and 8.1 percent for Banco Sabadell).

These are two very complementary banks, both for their geographic diversification and for their strengths in customer segments. In Spain, Banco Sabadell is the leader in SMEs, with a 12.7 percent share compared to BBVA’s 11.5 percent, while BBVA is stronger in retail banking, with a 14.7 percent share. , compared to 6.3 percent for Banco Sabadell.

One of BBVA’s priorities in this integration is to preserve the best talents from both institutions. All integration decisions in the labor market will be guided by the principles of professional competence and merit, without adopting traumatic measures and with all guarantees. Additionally, BBVA expects technology integration to take between 12 and 18 months.

The offer is subject to the acquisition of more than 50.01 percent of Banco Sabadell, the approval of the General Meeting of Shareholders and the approvals of the Spanish market and competition regulator (CNMC) and the UK Prudential Regulation Authority. Closing of the transaction is expected to take between six and eight months, once regulatory approvals are obtained. JP Morgan SE, UBS Europe SE, Rothschild & Co, Garrigues and DWP are advising BBVA on the transaction.

¹Premiums calculated on the exchange parity of the reference periods.

²ROIC: “Return on invested capital” calculated for 2026, taking into account the estimated savings resulting from the merger and without taking into account any potential impact derived from the asset management and custody services JVs. Formula used: (Incremental result for BBVA shareholders / impact on CET1 of the merger). Calculations are based on consensus figures from April 29.

³No potential impact derived from included asset management and custody services JVs. Change of ownership penalties and fair value adjustments for insurance and payment joint ventures already accounted for in purchase price allocation (PPA).

⁴On a pro forma Basel IV Fully Loaded basis, subject to regulatory approvals.

⁵Measured as return on regulated capital (RORC).