Spain's BBVA has reportedly requested authorisation from the European Central Bank for its over €12 billion hostile takeover bid of Sabadell.

According to sources cited by Reuters, BBVA has “now completed all the authorisation requests, including the UK's Prudential Regulation Authority”.

The all-share offer, rejected by Sabadell last month, prompted Spain's second-largest bank to launch a hostile bid in its latest attempt to acquire its smaller rival, the country's fourth-largest lender which also owns Britain's TSB.

A merger of the two banks, after a failed attempt in 2020, would create a lender with over €1 trillion in total assets and mark the latest consolidation in Spanish banking.

Spain's competition watchdog said on Tuesday that BBVA had sought approval for the Sabadell deal, a potential tie-up that the Spanish government has said it opposes.

Last month, BBVA asked the stock market regulator CNMV to authorise its offer of one newly-issued share for every 4.83 Sabadell shares, a premium of 30 per cent over 29 April closing pricesAs BBVA's shares have fallen to €9.46 from €10.90 since the offer was announced, the bid premium is now just over 5 per cent, valuing Sabadell at around €10.65 billion.

BBVA, which had set a minimum approval threshold of 50.01 per cent of Sabadell shares, has said the process could take six to eight months before formally going to shareholders.

Under Spanish law, the government cannot stop the process but has the final say on allowing a merger.

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