TSB Bank owner Sabadell says potential buyer refuses to raise offer

The owner of TSB Bank has said a rival Spanish bank has refused to raise its offer to buy the business, after revealing it rejected a takeover bid worth about 12 billion euros (£10.3 billion).

Banco Sabadell published a letter it received from the chairman of Banco Bilbao Vizcaya Argentaria (BBVA) about its proposal.

BBVA, which is also based in Spain, said it had “no room” to improve its offer for Sabadell which already values itself more highly than its share price value at the end of April.

It also partly blamed it on the fact that BBVA’s own market capitalisation has fallen by more than 6 billion euros (£5.2 billion) since speculation of the takeover bid first emerged.

“This situation absolutely prevents us from being able to pay more premium than we are already offering, because if we were to do so it is foreseeable that our value would fall again,” the statement read.

On Monday, Sabadell said it had rejected a potential takeover offer which would create one of the largest banking giants in Europe.

Sabadell said it had considered the proposal but that the board found it “significantly undervalues the potential of Banco Sabadell and its standalone growth prospects”.

It also said the recent decline and “volatility” in BBVA’s share price “increases the uncertainty around the value of the proposal”.

The board therefore decided to reject the proposal from the rival lender.

Banco Sabadell, which is Spain’s fourth-largest bank, also owns UK high street lender TSB and a bank that operates in Mexico.

The potential bid comes after UK building society Nationwide said it was buying smaller rival Virgin Money in a deal worth around £2.9 billion, creating a combined group with nearly 25 million customers.