ANALYSTS have argued that Banco Bilbao Vizcaya Argentaria (BBVA) could raise its hostile takeover bid for domestic rival Banco Sabadell by selling its UK arm TSB.

Offloading the business, which Sabadell bought for £1.7bn in 2015, could "allow BBVA to include a cash element of up to 10 per cent of the offer", Barclays analysts said in a note.

They added that this move to sell TSB would cost BBVA a "limited" negative 25 basis points in Common Equity Tier 1 capital (CET1). If the bank finds a buyer, a sale at terms in line with Nationwide's recent deal to buy Virgin Money could add around 20 basis points in CET1, the analysts estimated.

BBVA last week launched a rare hostile takeover bid for Sabadell after the latter rejected its initial offer, taking its €12.2bn (£10.5bn) all-share merger proposal directly to shareholders.

BBVA's CEO Onur Genc told analysts it was "too early to tell" whether he would sell TSB after a Sabadell merger when asked.

(c) 2024 City A.M., source Newspaper