Questions and answers about the offer to Banco Sabadell shareholders

• The aim is ultimately to merge the two banks, to build a more solid, more competitive and profitable entity and erect a benchmark within the market in terms of assets, loans and deposits. The new bank will have greater scale, which will put us in a better position to address the structural challenges posed by the financial sector, while efficiently making the necessary investments in digital transformation within an increasingly global sector.
• The complementarity and the ability to generate significant synergies make this transaction financially attractive for the shareholders of both BBVA and Banco Sabadell.BBVA remains firmly committed to all the markets in which it operates, and from a position of strength it will step up its support for businesses and for cultural, scientific and social projects. It will do this not only through its core banking activity, but also through its various foundations in Catalonia, the Valencian Community and the other regions where Banco Sabadell is present.

• The transaction will also be positive for our other stakeholders.

○  Our customers stand to benefit from a unique value proposition, thanks to the synergies between both franchises, a wider range of products and the new bank’s more global outreach.

○ Employees will have access to new career and growth opportunities within an even more global entity

○ Greater lending capacity to households and businesses (roughly €5 billion in additional lending per year) and to contribute to the public coffers via taxes.

○  This will ultimately lead to greater economic and social progress.

• In mid-April 2024, BBVA Chair met with the Chair of Banco Sabadell to convey BBVA’s interest in resuming the talks that did not ultimately come to fruition back in 2020. They were asked to deliver a specific proposal on April 30, 2024, but on that day a leak to the press precipitated the events that unfolded. Upon learning that Banco Sabadell’s board had turned down the proposed merger offer on May 6, 2024, BBVA wished to give its shareholders the opportunity to decide about the exchange of their shares for those of BBVA. BBVA believes that both sides stand to benefit, and therefore the proposal should be presented directly to Sabadell’s shareholders, its legitimate owners, so that they can weigh it up, without this generating any conflict.
• In accordance with European and Spanish rules and regulations on takeover bids, the decision on whether to accept does not fall to the board of directors of the target company, but rests squarely on the shoulders of its shareholders. Its board must comply with the neutrality rule, whereby it prevents any action (without prior approval from the general shareholders' meeting) that might impede the success of the bid.

• The offer represents a premium of 30 percent over the closing price on April 29, 2024¹ of 42 percent² over the volume weighted average price of the month prior to April 29, 2024; and of 50 percent² over the weighted average price for the previous three months.
• Assuming 100 percent uptake, Banco Sabadell shareholders would acquire a stake of approximately 15 percent in BBVA, benefiting from the additional value created by the project.
• Given the synergies expected (€850 million³), earnings per share would increase by about 27 percent⁴ for the shareholders of Banco Sabadell.
• BBVA will update and publish all relevant information once it obtains the approval of the prospectus of the tender offer by the National Securities Market Commission (CNMV). Such approval is expected in the next few weeks.

¹According to the terms set out in the communication to the market released on May 1, 2024.

²According to the terms set out in the communication to the market released on May 1, 2024 and based on the volume average weighted price (VWAP) of Banco Sabadell and BBVA at the corresponding date.

³ The Council of Ministers’ condition that BBVA and Banco Sabadell maintain separate legal entities and shareholders’ equity, as well as autonomy in management for a period of three years means a delay in the realization of some of the estimated synergies.

⁴ Increase in earnings per share (EPS) for Sabadell shareholders, calculated as the variation between the following two figures:

- Initial estimated EPS in 2026: estimated EPS for Banco Sabadell of €0.24/share. This EPS is calculated as the quotient of: estimated net profit in 2026 for Banco Sabadell of €1.25 billion according to analyst consensus published in Bloomberg on April 29, 2024; and the number of Banco Sabadell shareholders after deducting the total amount of shares in the €340 million share buyback plan that the bank had in place on that date (estimated at 5.28 billion shares).

- Estimated final EPS in 2026: estimated EPS in 2026 (adjusted for the initial exchange ratio of one share of BBVA for every 4.83 shares of Banco Sabadell) of €0.30/share. This EPS takes into consideration: in the numerator, 1) the sum of the estimated net earnings in 2026 of BBVA and Banco Sabadell according to analyst consensus published in Bloomberg on April 29, 2024 (€8.09 billion and €1.25 billion respectively); plus 2) the net synergies (assuming complete implementation) from taxes (€603 million); in the denominator, 6.86 billion shares, assuming 100 percent uptake (based on the above-mentioned 5.28 billion Banco Sabadell shares), adjusted for the indicated exchange ratio.

• The terms of the offer made public on May 9, 2024 foresaw an adjustment to the consideration in the event of dividend distribution by either of the two banks, with the aim of maintaining the financial conditions of the offer under these circumstances.
• Therefore:
  • As of March 26, 2025, the exchange ratio is now one newly issued share in BBVA for every 5.3456 shares of Banco Sabadell⁵.
  • Additionally, as of April 8, 2025, the cash payment has raised to €0.70 for every 5.3456 common shares of Banco Sabadell.

⁵ Initially: one newly issued share in BBVA for every 4.83 shares in Banco Sabadell.

• The financial terms are attractive for shareholders of both banks, given the potential for unlocking significant synergies.

Specifically, for BBVA shareholders⁶:

• The increase in earnings per share⁷ will be gradual from the first year of the merger, increasing by 3.5 percent once the savings have been fully realized (in the third year following the merger).
• Tangible book value per share will increase by approximately one percent on the merger date.
• The incremental return on investment for BBVA shareholders (ROIIC) is approximately 20 percent⁸, which is significantly higher than the cost of capital and compares favorably with other investment options, particularly with a potential share buyback.
• BBVA will update and publish all relevant information once it obtains the approval of the prospectus of the tender offer by the National Securities Market Commission (CNMV). Such approval is expected in the next few weeks.

⁶ According to the terms set out in the offer presented on May 9, 2024.

⁷ Based on consensus figures from April 29, 2024, taking estimated synergies into account. The Council of Ministers’ condition that BBVA and Banco Sabadell maintain separate legal entities and shareholders’ equity, as well as autonomy in management for a period of three years means a delay in the realization of some of the estimated synergies.

⁸ Calculated for 2026 taking estimated synergies from the merger into account, and not including any potential impact resulting from the asset management and custody joint ventures. Formula used: [Incremental result for BBVA shareholders / impact of merger on CET1]. Based on consensus figures as of April 29.

• From the moment that an acquisition is announced, it is common for the share price of the target bank to converge with the exchange price being offered, especially when the transaction will take place through an exchange of shares
• This convergence does not mean that the offer is less attractive, but that to a large extent the share price already reflects the value of the offer. In other words, in the absence of this offer, the share price would be different.
• It therefore makes sense to assess the attractiveness of the transaction by comparing the premium with the share price prior to the announcement of the transaction (in this case, April 29, 2024).
• In this sense, BBVA’s offer implies a premium of 30 percent over the price on April 29, 2024⁹, 42 percent¹⁰ over the weighted average share price for the month prior to April 29, 2024; and 50 percent¹⁰ over the weighted average share price for the previous three months.

⁹ According to the terms included in the communication to the market on May 1, 2024.

¹⁰ According to the terms included in the communication to the market on May 1, 2024 and based on the volume average weighted price (VWAP) of Banco Sabadell and BBVA at the corresponding date.

• Our approach has always been friendly.
• In mid-April 2024, the BBVA Chair approached the Banco Sabadell Chair to explore a potential merger, based on the terms negotiated in 2020, but with a substantially better financial offer.
• On April 30, 2024, BBVA presented the written proposal for a merger to Banco Sabadell’s Board. Banco Sabadell rejected the proposal on May 6, 2024.
• On May 8, 2024, BBVA’s Board of Directors agreed to present the offer, on the same financial terms presented to Banco Sabadell’s Board, directly to its shareholders in order to give them the opportunity to decide. This decision by BBVA’s Board led to the announcement prior to the public offer published the following day, May 9, 2024.

• We expect a limited impact on CET1 of approximately -51 basis points assuming 100 percent uptake¹¹ (including restructuring costs net of taxes and dividends, as well as the corresponding prudential deductions). If restructuring costs are not included, the impact would be reduced to -27 basis points.
• In a non-merger scenario, the CET1 impact, provided that BBVA acquires more than half of Banco Sabadell’s voting rights, would be -62 basis points. This is due, among other reasons, to the inefficiency of the capital calculation of minority interests, which would disappear once a stake of 100 percent is reached. Not including restructuring costs, this impact would fall to -49 basis points.
• BBVA will update and publish all relevant information once it obtains the approval of the prospectus of the tender offer by the National Securities Market Commission (CNMV). Such approval is expected in the next few weeks.

¹¹ Updated impact on capital (initial estimate of -30 bps), mainly based on the adjustment in the offer due to the dividend payments announced by both  BBVA and Banco Sabadell since the offer was made, as well as the inclusion of the impact of the €993 million share buyback announced by BBVA, as anticipated in the offer presented on May 9, 2024. This figure does not consider any potential impact related to the joint ventures, except for penalties for the change in ownership and fair value adjustments for the insurance joint ventures, already accounted for in the purchase price allocation (PPA).

• Restructuring costs stand at approximately €1.45 billion before taxes.
• It is important to note that, unlike various market precedents, this transaction will involve lower restructuring costs/savings associated with personnel expenses. This is because both BBVA and Banco Sabadell have already undertaken significant network optimization over the past few years. Most of the synergies are associated with savings in technology and systems costs, as well as other general administration expenses, with a lower associated restructuring cost.
• As with the synergies, the Council of Ministers’ condition that BBVA and Banco Sabadell maintain separate legal entities and shareholders’ equity, as well as autonomy in management for a period of three years means a delay in the timing of when restructuring costs will be realized compared to the original schedule.
• BBVA will update and publish all relevant information once it obtains the approval of the prospectus of the tender offer by the National Securities Market Commission (CNMV). Such approval is expected in the next few weeks.

• The estimated value of the synergies associated with the integration of both banks stands at €850 million before taxes. Main concepts include:
  • Operating cost savings anticipated at approximately €750 million before taxes. Of this amount, €450 million corresponds to general expenses (technology and administrative costs) and €300 million to personnel costs.

As part of the cost optimization and rationalization process, BBVA estimates that less than 10 percent of the combined total of branches of both banks in Spain would be closed¹² (the equivalent of 300 of the 870 branches with a proximity of less than 500 meters).

• • Savings in funding costs estimated at €100 million before taxes. These savings will accrue gradually as Sabadell wholesale funding instruments mature.
• The Council of Ministers’ condition that BBVA and Banco Sabadell maintain separate  legal entities and shareholders’ equity, as well as autonomy in management for a period of three years means a delay in the realization of some of the estimated synergies.
• BBVA will update and publish all relevant information once it obtains the approval of the prospectus of the tender offer by the National Securities Market Commission (CNMV). Such approval is expected in the next few weeks.

¹² As of March 31, 2025, BBVA had a network of 1,880 branches in Spain, while Banco Sabadell had 1,153; in other words, a total of 3,033 branches.

• BBVA has not incorporated any positive or negative revenue synergies in the figures it has disclosed.
• BBVA’s intention is to boost growth: it has calculated a capacity to lend an additional €5 billion per year to households and businesses.

• On June 24, 2025, the Spanish government approved the economic concentration of BBVA and Banco Sabadell, imposing the additional condition - on top of the remedies agreed with the CNMC - that both banks maintain  separate legal entities and shareholders’ equity, as well as autonomy in management for a three year period.¹³
• After analyzing this condition, BBVA has decided to move ahead because the transaction creates value for the shareholders of both banks, even though the condition will delay the realization of some of the estimated synergies.
• BBVA will update and publish all relevant information once it obtains the approval of the prospectus of the tender offer by the National Securities Market Commission (CNMV). Such approval is expected in the next few weeks.

¹³ Can be extended for two more years.

• The Council of Ministers’ condition that BBVA and Banco Sabadell maintain separate  legal entities and shareholders’ equity, as well as autonomy in management for a period of three years¹⁴ means a delay in the realization of some of the estimated synergies. Nevertheless, BBVA believes that the transaction still creates value for the shareholders of both banks.
• BBVA will update and publish all relevant information once it obtains the approval of the prospectus of the tender offer by the National Securities Market Commission (CNMV). Such approval is expected in the next few weeks.

¹⁴ Can be extended for two more years.

• BBVA has made an estimate, based on public information, of the potential cost of breaking up these existing alliances.
• BBVA’s calculations include an estimation of the financial penalty arising from the change of control in relation to Banco Sabadell existing alliances in the fields of pensions and bancassurance, as well as the corresponding fair value adjustments.
• In any case, once BBVA has all the information needed to make a sufficiently informed decision, it will begin a negotiation process with Banco Sabadell partners for each of the existing agreements, and make the best decision based on value creation criteria for shareholders and customers.

• BBVA is committed to ensuring that no one is denied access to financial services.
• Of the remedies BBVA has agreed with the CNMC, several are actually related to financial inclusion, territorial cohesion and the protection of vulnerable customers. For a three-year period, it has been agreed to:
  • Not closing branches where there is no other nearby branch (BBVA or Banco Sabadell) within a radius of at least 300 meters.
  • Not closing offices in those postal codes with a per capita income of less than €10,000 (205 postal codes).
  • Not leaving behind any municipality (nor substituting via an agent, a mobile bank or other means) in which there are fewer than three competitors (49 municipalities).
  • Customers in these municipalities will be offered the “Correos Cash” service, with two free weekly transactions under €2,500 each.
  • Not closing branches in municipalities with fewer than 5,000 inhabitants where at least one of Banco Sabadell or BBVA operates (140 municipalities).
  • Not closing the offices of Banco Sabadell specializing in businesses in all of Spain.
  • Maintaining teller services with the same business hours at all BBVA and Banco Sabadell branches.
  • Creating an account for vulnerable customers, with no opening, administration and maintenance fees; a free debit card and free, unlimited domestic transfers through digital channels, and no fees in currency transfers, among other terms and conditions.
  • Not closing off-premises ATMs in postal codes where there is only one or no other competitor (currently 11 BBVA off-premises ATMs, to which Banco Sabadell off-premises ATMs will be added).
  • Maintaining access to Banco Sabadell’s ATM network for all customers of the entities belonging to the Euro 6000 and Cardtronics networks for a period of 18 months, on the same terms they had with Banco Sabadell.
  • Maintaining Banco Sabadell’s current fees policy for ATM withdrawals using cards issued by other banks, for 18 months or until the merger is completed.

• On April, 30, 2025, the Spanish Competition Authority (CNMC) approved the union of BBVA with Banco Sabadell, in phase two, and subject to a series of unprecedented  remedies that ensure financial inclusion, territorial cohesion and lending to SMEs and the self-employed.
• On June 24, 2025, the Council of Ministers approved the transaction with the condition that both banks maintain separate  legal entities and shareholders’ equity, as well as autonomy in management for a three year period. This condition is in addition to the remedies agreed with the CNMC.
• This brings the total number of approvals obtained since BBVA announced the transaction to 27. Some of the most significant include the approval of the U.K.Prudential Regulation Authority (PRA) and the non-objection from the European Central Bank.
• The next steps needed are:
  • The approval of the prospectus of the takeover bid by Spanish financial markets regulator (CNMV).
  • The acquisition by BBVA of, at least, more than half of the voting rights of Banco Sabadell shares at the end of the acceptance period of the offer (excluding any treasury shares it may hold at that time).

• After the Spanish Securities Market Commission (CNMV) approves  the prospectus of the offer, BBVA will open the take-up period for the offer within the next five business days. There will be at least 30 calendar days to accept the exchange offer. BBVA may extend this acceptance period up to a maximum of 70 calendar days.

• Once the necessary approvals have been obtained and the conditions to which the transaction is subject have been met, the offer made by BBVA will be irrevocable.

• We believe the Spanish financial sector is highly competitive due to strong competition from both major and smaller players, including new entrants and fintech firms.
  • The analysis of the combined market share of the two banks suggests that it will remain moderate on a national level in the key segments.  
  • Moreover, market shares and concentration levels must be viewed in the context of other equally important factors, such as the high degree of buoyancy and competitiveness, the absence of barriers to entry—which are also being eroded as the digitization of financial services moves forward—and customers’ ability to switch operators at no cost. In terms of digitization, 85 percent of interactions between banks and customers are conducted over digital channels.
• In the resolution issued by the CNMC on April 30, 2025, it was determined that the transaction does not negatively affect the majority of the markets analyzed in which BBVA and Banco Sabadell operate. For those other markets where the CNMC considered that the transaction could affect competition, BBVA submitted a package of remedies that the CNMC deemed appropriate and adequate.

• The Spanish National Markets and Competition Commission (CNMC) has approved the union of BBVA and Banco Sabadell. The authorization is subject to a series of unprecedented remedies in the Spanish financial sector.
• The remedies undertaken will last for three years, unless otherwise indicated, and will protect competition while ensuring financial inclusion, territorial cohesion and credit for SMEs and the self-employed, especially in the territories with greater presence of both entities, such as Catalonia.
  • Among the remedies, one that stands out is the commitment to not close branches where there is no other branch within 300 meters, in postal codes with a per capita income below €10,000, where there are fewer than three competitors, or in municipalities with fewer than 5,000 residents.
  • The remedy to maintain the commercial terms and conditions for retail customers, the self-employed and SMEs in postal codes with fewer than four competitors also stands out.
  • BBVA will create an account for vulnerable customers from both Banco Sabadell and BBVA, with no fees and a free debit card, among other conditions.
  • As for SMEs and the self-employed, in addition to not closing any of the Banco Sabadell branches specializing in businesses, BBVA has also committed to maintain working capital credit lines for three years (extendable by two more years, should the CNMC decide to do so), for all SMEs  banking with Banco Sabadell and the credit lines and goods import-export facilities for all Sabadell self-employed customers. Moreover, BBVA commits to maintain the total credit volume for SMEs whose aggregated CIRBE¹⁵ credit exposure with BBVA and Banco Sabadell is at least 85 percent. In the Autonomous Communities where the share of SME lending segment is higher (Catalonia and the Balearic Islands), this remedy will apply to SMEs whose aggregated CIRBE credit exposure is at least 50 percent.
  • In addition, for SMEs and the self-employed in postal codes where there are fewer than four competitors, prices of the new credit flow will not exceed the average price applied at national level.
  • As for acquiring services market (POS), BBVA has committed to maintain the terms of acquiring services contracted by SMEs and self-employed customers with either BBVA and/or Banco Sabadell.

¹⁵ Central de Información de Riesgos de Banco de España / Bank of Spain Risk Information Center.

• As a general rule, the remedies undertaken will take effect from the moment BBVA appoints a number of members to Banco Sabadell’s Board of Directors corresponding to its ownership stake (known as takeover).
• Remedies relating to preserving BBVA's physical presence in certain territories (remedies 4.1, 4.3, 4.4, 4.5, 4.7, and 4.8), as well as those related to continuing the commercial terms offered in certain postal codes for BBVA customers (remedies 5.1, 5.2, 5.3, and 5.4) and those related to acquiring services (remedy 9.1) entered into by BBVA customers came into effect on June 24, 2025, when the Council of Ministers approved the concentration¹⁶.

¹⁶ On May 27, and having elapsed the legal period of 15 working days, the Minister of Economy, Trade and Enterprise decided to refer the CNMC’s resolution to the Council of Ministers for consideration, based on criteria of public interest other than competition concerns. On June 24, 2025, the Council of Ministers approved the concentration with the condition that BBVA and Banco Sabadell maintain separate  legal entities and shareholders’ equity, as well as autonomy in management  for three years. This is on top of the remedies agreed with the CNMC.

• As is standard in other purchase transactions reviewed by the CNMC, the remedies will generally last for three years, unless otherwise specified¹⁷.
• In the specific case of remedies relating to the maintenance of credit to SMEs and the self-employed, these could be extended for an additional two years if the CNMC deems such extension is desirable.
• If the transaction does not go ahead, ALL remedies shall become void immediately.

¹⁷ Remedies 6.1 and 6. 2, relating to maintaining access to Banco Sabadell ATMs for customers of Euro 6000 and Cardtronics network banks under the same terms as they had with Banco Sabadell, and maintaining Banco Sabadell's current policy on fees for cash withdrawals from ATMs using other banks' cards, will be valid for 18 months (or until the merger, if it occurs).

• An SME is defined as any commercial company operating in Spain, employing fewer than 250 people and with an annual turnover not exceeding €50 million, or whose annual balance sheet total does not exceed €43 million.

• The reference date for the purposes of remedies relating to the maintenance of the volume of credit to SMEs and the self-employed is April 30, 2025.

• The remedies adopted include a series of measures to make them public and ensure that customers have complete and accurate information.

• We will serve customers via the usual channels:
  • BBVA branch network
  • Línea BBVA helpline
  • BBVA customer service
  • BBVA customer ombudsman

• BBVA will submit a half-yearly report to the CNMC containing a summary of any incidents recorded.

• Banco Sabadell’s shareholders must decide whether they accept the offer presented by BBVA.
• Once the prospectus has been approved by the CNMV, and within a maximum of five business days, BBVA will publish the offer and its acceptance period will begin.
• Banco Sabadell shareholders who wish to accept the offer must present their declaration of acceptance to the organization where their shares of Banco Sabadell are held, during the period established for this purpose by BBVA.
  • The acceptance period will begin on the first trading day following the publication of the offer.
  • It will be no less than 30 calendar days and no more than 70.¹⁸
• Banco Sabadell shareholders may accept the offer for all of the shares they hold, or only for a portion of them.
• Offer acceptance statements may be revoked at any time before the final day of the acceptance period.
• Following the acceptance period, and a maximum of seven trading days after this date, the governing bodies of the Spanish Stock Exchanges will publish the results of the offer in the Official Listing Bulletins in the terms and during the session specifically indicated by the CNMV.

¹⁸ BBVA may extend the offer acceptance period once, or multiple times, after notifying the CNMV, as long as it does not exceed the maximum period of 70 calendar days.

• The bid extends to all Banco Sabadell shareholders. 

• Banco Sabadell shareholders who choose not to take up the offer during the acceptance period will retain their shares in Banco Sabadell until both banks are ultimately merged.
• As a result of the offer, the number of shares outstanding of Banco Sabadell in the hands of shareholders other than BBVA may fall significantly. Therefore, during the period (between the completion of the offer and the merger) in which Banco Sabadell remains a listed company, this situation may affect the liquidity of its shares.
• If at least 90 percent of Banco Sabadell's share capital accepts the offer, BBVA will exercise its squeeze-out right on the remaining shares of Banco Sabadell's share capital that did not take up the offer, under the same terms as the offer, as adjusted to the new exchange ratio (one new BBVA share plus €0.70 in cash for every 5.3456 Banco Sabadell). If this were to occur, BBVA would become the holder of all (100 percent) of Banco Sabadell's capital stock and Banco Sabadell would automatically be delisted.

• BBVA is proposing the combination of two great banks, so that they can achieve more together than they could hope to achieve by going it alone.  In addition to the attractive premium from the transaction, Banco Sabadell shareholders will benefit from the increased capacity to generate earnings and the significant potential for synergies (€850 million gross annually¹⁹). Therefore, Banco Sabadell shareholders stand to benefit from an increase in earnings per share of approximately 27 percent²⁰.
• This higher earnings per share would also translate into sustainable dividends over time, as BBVA will maintain its attractive shareholder distribution policy, which involves payouts of 40 to 50 percent of profit, with the possibility of combining cash dividends and share buybacks, as well as the commitment to distribute excess capital over 12 percent²¹.
• BBVA will update and publish all relevant information once it obtains the approval of the prospectus of the tender offer by the National Securities Market Commission (CNMV). Such approval is expected in the next few weeks.

¹⁹  The Council of Ministers’ condition that BBVA and Banco Sabadell maintain separate  legal entities and shareholders’ equity, as well as autonomy in management  for a period of three years means a delay in the realization of some of the estimated synergies.

²⁰ Increase in earnings per share (EPS) for Sabadell shareholders, calculated as the variation between the following two figures: - Initial estimated EPS in 2026: estimated EPS for Banco Sabadell of €0.24/share. This EPS is calculated as the quotient between: estimated net profit in 2026 for Banco Sabadell of €1.25 billion according to analyst consensus published in Bloomberg on April 29, 2024; and the number of Banco Sabadell shareholders after deducting the total amount of shares included in the €340 million share buyback plan that the bank had in place on that date (estimated at 5.28 billion shares).

- Estimated final EPS in 2026: estimated EPS in 2026 (adjusted for the initial exchange ratio of one share of BBVA for every 4.83 shares of Banco Sabadell)  of €0.30/share. This EPS takes into consideration: in the numerator, one) the sum of the estimated net earnings in 2026 of BBVA and Banco Sabadell according to analyst consensus published in Bloomberg on April 29, 2024 (€8.09 billion and €1.25 billion respectively); plus two) the synergies (assuming complete implementation) net of tax (€603 million); in the denominator, 6.86 billion shares, assuming 100 percent uptake (based on 5.28 billion Banco Sabadell shares, as mentioned above), adjusted for the indicated exchange ratio.

²¹ Based on a pro-forma Basel IV fully-loaded CET1 ratio, subject to regulatory approvals.

• BBVA will continue to pursue its current shareholder return policy, whereby shareholders receive between 40 and 50 percent of the bank’s profits, with the additional option of combining cash dividends and share buybacks. Under its existing policy, BBVA has also pledged to pay out any capital that is surplus to a CET1 ratio of 12 percent²².

²² Based on a pro-forma Basel IV fully-loaded CET1 ratio, subject to regulatory approvals.

•  The purpose of the transaction is to complement our strengths with those of Banco Sabadell. The project represents a clear commitment to SMEs. We want to combine our experience with Sabadell’s and, together, build the best bank for all individual customers, businesses and SME clients.
• Of the remedies agreed with the CNMC, the following are related to SMEs:
  • BBVA will not close the offices of Banco Sabadell specializing in businesses in all of Spain.
  • With regard to commercial terms and conditions, BBVA undertakes to:
    • Maintain commercial terms and conditions in postal codes where there are fewer than four financial institutions (174 postal codes).
    • Furthermore, for SMEs and the self-employed in these postal codes, new loan prices will not exceed the national average  for each rating level and financing product that is granted (174 postal codes).
    • Maintain the terms  of acquiring services POS²³ contracted by SMEs and self-employed customers with BBVA and/or Banco Sabadell.
  • As for lending for SMEs and the self-employed²⁴, BBVA is committed to:
    • Maintaining the working capital credit lines (financing with a term of one year or less), including those intended for imports and exports of products, contracted  by all SMEs with Banco Sabadell.
    • Maintaining the credit lines and goods import-export facilities with a term of one year or less contracted by all self-employed individuals with Banco Sabadell.
    • Maintaining the total credit volume for SMEs whose aggregated CIRBE²⁵ credit exposure with BBVA and Banco Sabadell is at least 85 percent.
    • In those Autonomous Communities where  the resulting entity's market share in the SME segment exceeds 30 percent with an addition greater than 10 percent (in this case, Catalonia and the Balearic Islands), maintaining the total credit volume for SMEs whose aggregated CIRBE credit exposure with BBVA and Banco Sabadell is at least 50 percent.
    • The CNMC will assess the effectiveness of these measures after three years and decide whether to extend them for another two.

²³ Point of sale terminals.

²⁴ Unless there is a breach of anti-money laundering regulations or international sanctions; forgery of data is detected; or there is a significant increase in credit risk under the terms set out in the Banco de España’s Circular 4/2017.

²⁵ Central de Información de Riesgos de Banco de España / Bank of Spain Risk Information Center.

• Following the transaction, BBVA estimates to lend roughly €5 billion more each year to both households and businesses.
• Customers of both banks will benefit from a better value proposition, given the complementarity of both franchises, a wider range of products and the bank’s global reach.
• Furthermore, Banco Sabadell's customers also stand to benefit from a new network of branches and ATMs with a greater presence across the country: nearly 7,000 branches worldwide, of which over 2,700 would be in Spain (even after post-merger closures). This is more than double the number of branches Sabadell currently operates. Additionally, the new bank would have over 7,000 ATMs in Spain, nearly three times as many as Sabadell on its own.
• A greater scale will pave the way for further investments in the development of new capabilities, resulting in a better and more innovative range of products.
• The transaction will create a stronger and, therefore, a more resilient bank to face adverse macroeconomic events, making it more adept at supporting its customers when they need it the most.
• In addition, Banco Sabadell clients will be better able to expand their businesses into wider international markets within the BBVA footprint. This will bring them fresh business opportunities and boost their potential for growth.