BBVA & Sabadell merger saga: Spain's ever shrinking banking system

Executive Summary

Mergers and consolidation are not a new theme for Spain banking system, which explains the  dwindling number of banks from 55 (before GFC in 2008) to just 10 now. BBVA has been making efforts to increase its market share by targeting Sabadell. Sabadell has been steadfast in its view that BBVA has valued the bank way below what it is worth. The large retail shareholding of Sabadell and their interest in keeping their Catalonian roots may be a dampener to the deal. From a GCC investor perspective who has exposure to these banks as depositors and investors, it may not be a matter of concern as Spanish banks enjoy good credit rating and have shown  some healthy shareholder wealth creation as well.