MADRID (S&P Global Ratings) Nov. 27, 2020—S&P Global Ratings said today that the failure of merger negotiations between Banco Bilbao Vizcaya Argentaria S.A. (BBVA; A-/Negative/A-2) and Banco de Sabadell S.A. (Sabadell, BBB/Negative/A-2), reportedly due to disagreements on the price, raises uncertainties regarding the banks' next strategic moves. Furthermore, we believe this is bad news for the Spanish banking system, since increased consolidation would have helped make it more efficient. Sabadell will likely continue to struggle with improving its profitability, which has been under increased pressure as a result of the COVID-19 pandemic, with higher credit provisions adding to pre-existing revenue challenges. As communicated some weeks ago, the bank will undertake business restructuring, which will involve sizable downsizing of its branch
