F-4/A

F-4/A 1 d858842df4a.htm F-4/A F-4/A

As filed with the Securities and Exchange Commission on October 15, 2024.

Registration No. 333-281111

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 2

Form F-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

BANCO BILBAO VIZCAYA ARGENTARIA, S.A.

(Exact name of Registrant as specified in its charter)

Kingdom of Spain

6029

Not Applicable

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

Calle Azul, 4

28050 Madrid

Spain

+34-91-537-7000

(Address, including Zip Code, and Telephone Number, including Area Code, of Registrant’s Principal Executive Offices)

Diego Crasny

Banco Bilbao Vizcaya Argentaria, S.A.

New York Branch

1345 Avenue of the Americas, 44th Floor

New York, New York 10105

+1-212-728-1660

(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

Please send copies of all communications to:

Michael J. Willisch

Ester del Valle Izquierdo

Davis Polk & Wardwell LLP

Paseo de la Castellana, 41

28046 Madrid, Spain

+34-91-768-9610

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ☒

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933. Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

†	The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

THE INFORMATION IN THIS PRELIMINARY OFFER TO EXCHANGE/PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE REGISTRANT MAY NOT COMPLETE THE OFFER AND ISSUE THESE SECURITIES UNTIL THE REGISTRATION STATEMENT RELATING TO THESE SECURITIES AND FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY OFFER TO EXCHANGE/PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE OR OTHER JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

PRELIMINARY - SUBJECT TO COMPLETION DATED OCTOBER 15, 2024

Offer to Exchange/Prospectus

Offer to Exchange

100% of the shares of

BANCO DE SABADELL, S.A.

for shares of

BANCO BILBAO VIZCAYA ARGENTARIA, S.A.

and cash

Banco Bilbao Vizcaya Argentaria, S.A., a bank organized under the laws of the Kingdom of Spain (“Spain”) (“BBVA”, and, together with BBVA’s subsidiaries, the “BBVA Group”), is undertaking an exchange offer (the “exchange offer”) pursuant to the offering documents published (or that will be published) in Spain and made available (or that will be made available) to all shareholders of Banco de Sabadell, S.A., a bank organized under the laws of Spain (“Banco Sabadell”, and, together with its subsidiaries, the “Banco Sabadell Group”), to acquire all of the issued and outstanding shares of Banco Sabadell, with a nominal value of €0.125 per share (each, a “Banco Sabadell share”) in exchange for ordinary shares, with a par value of €0.49 per share, of BBVA (each, a “BBVA share”) and cash. The exchange offer will be addressed to U.S. holders of Banco Sabadell shares (as defined herein) (the “U.S. tranche of the exchange offer”) pursuant to this offer to exchange/prospectus.

Pursuant to the exchange offer, BBVA is offering one newly-issued BBVA share and €0.29 in cash for each 5.0196 Banco Sabadell shares tendered and not withdrawn. Banco Sabadell shares are listed on the Madrid, Bilbao, Barcelona and Valencia Stock Exchanges (the “Spanish Stock Exchanges”).

No fractional BBVA shares will be issued in connection with the exchange offer. Instead of any such fractional BBVA shares that a tendering holder of Banco Sabadell shares would otherwise be entitled to receive, BBVA will pay to the relevant tendering holder an amount in cash equal to the weighted average price per BBVA share during the 15 trading sessions prior to the expiration date (including the expiration date) multiplied by the fraction of a BBVA share (rounded to the nearest hundredth with five one thousandths of a BBVA share being rounded upwards (e.g., 0.205 would be rounded to 0.21)) that a tendering holder of Banco Sabadell shares would otherwise be entitled to receive in accordance with the exchange ratio of 5.0196 (adjusted, as the case may be, as described in this offer to exchange/prospectus). Such amount in cash will be rounded to the nearest euro cent and, in the event of a half of a euro cent, to the immediately higher euro cent. Under no circumstances will interest be paid on the cash to be received in lieu of any fractional shares.

With respect to the exchange offer cash consideration (as defined herein), tendering holders of Banco Sabadell shares that tender a number of Banco Sabadell shares that does not entitle them to receive at least one newly-issued BBVA share, or that entitles them to receive a whole number of newly-issued BBVA shares but have an excess number of Banco Sabadell shares that would entitle them to receive the above cash payment in lieu of a fractional BBVA share, will receive an amount in cash equal to €0.29 multiplied by the fraction of a BBVA share (rounded to the nearest hundredth with five one thousandths of a BBVA share being rounded upwards (e.g., 0.205 would be rounded to 0.21)) that they would otherwise be entitled to receive in accordance with the exchange ratio of 5.0196 (adjusted, as the case may be, as described in this offer to exchange/prospectus). Such amount in cash will be rounded to the nearest euro cent and, in the event of a half of a euro cent, to the immediately higher euro cent. Under no circumstances will interest be paid on the exchange offer cash consideration.

exchange offered as consideration in the exchange offer or in such subsequent squeeze-out transaction, or both, as applicable, will be adjusted accordingly by an amount equal to the gross amount of the distribution per Banco Sabadell share. The adjustment will be made taking into account the weighted average price per BBVA share during the three-month period prior to the publication of BBVA’s announcement of its intention to make the exchange offer and the equivalent price per Banco Sabadell share resulting from the application of the original exchange ratio of 4.83, that is €10.24 per BBVA share and €2.12 per Banco Sabadell share. On October 1, 2024, Banco Sabadell paid a dividend of €0.08 per Banco Sabadell share and, as a result, the applicable exchange ratio was adjusted from the original exchange ratio of one newly-issued BBVA share for each 4.83 Banco Sabadell shares to one newly-issued BBVA share for each 5.0196 Banco Sabadell shares (which is the result of dividing €10.24 per BBVA share by €2.04 per ex-dividend Banco Sabadell share).

If BBVA makes any distribution of dividends, reserves or any other type of distribution to its shareholders (regardless of whether it is an ordinary, extraordinary, interim or complementary distribution) prior to the settlement of the exchange offer or, if applicable, after the settlement of the exchange offer but before the settlement of a subsequent squeeze-out transaction, the consideration payable upon settlement of the exchange offer or settlement of such subsequent squeeze-out transaction, or both, as applicable, will be adjusted upwards by including a cash payment for each Banco Sabadell share tendered pursuant to the exchange offer or acquired in such subsequent squeeze-out transaction, or both, as applicable, equal to the gross amount of the relevant distribution per BBVA share divided by the exchange ratio of 5.0196 (adjusted, as the case may be, as described in this offer to exchange/prospectus). On October 10, 2024, BBVA paid a dividend of €0.29 per BBVA share and, as a result, BBVA increased the exchange offer consideration to one newly-issued BBVA share and €0.29 in cash for each 5.0196 Banco Sabadell shares tendered and not withdrawn. The purpose of the exchange offer cash consideration is to provide tendering holders of Banco Sabadell shares with an amount equivalent to the interim dividend with respect to financial year 2024 paid by BBVA to its shareholders on October 10, 2024, as such amount would have been received by such tendering holders of Banco Sabadell shares, along with the rest of BBVA’s shareholders, had the exchange offer been completed and had they been shareholders of BBVA at the time the dividend was paid. As a result, tendering holders of Banco Sabadell shares will receive this equivalent amount once they become shareholders of BBVA.

This offer to exchange/prospectus is being addressed to all holders of Banco Sabadell shares that are residents of, or located in, the United States (each, a “U.S. holder”). Separate offering documents are being (or will be) published in Spain and made available (or will be made available) to all holders of Banco Sabadell shares.

The exchange offer is being made on the terms and subject to the conditions set forth in this offer to exchange/prospectus under “The Exchange Offer” beginning on page 104.

THE EXCHANGE OFFER WILL EXPIRE AT 17:59:59 P.M. EASTERN TIME (23:59:59 P.M. CENTRAL EUROPEAN TIME) (THE “EXPIRATION TIME”) ON , 2024 (AS SUCH DATE MAY BE EXTENDED, THE “EXPIRATION DATE”), UNLESS THE EXCHANGE OFFER IS EXTENDED.

BBVA shares are listed on the Spanish Stock Exchanges under the symbol “BBVA”. BBVA shares are also listed on the London Stock Exchange (“LSE”) under the symbol “BVA” and the Mexican Stock Exchange under the symbol “BBVA”. BBVA’s American Depositary Shares (“BBVA ADSs”) are listed on the New York Stock Exchange (“NYSE”) under the symbol “BBVA”. Each BBVA ADS represents the right to receive one BBVA share. Banco Sabadell shares are listed on the Spanish Stock Exchanges under the symbol “SAB”. On October 11, 2024, the closing price of the BBVA shares listed on the Spanish Stock Exchanges was €9.228 (equivalent to U.S.$10.09 based on the exchange rate as published by the European Central Bank (“ECB”) on such date). On October 11, 2024, the closing price of the Banco Sabadell shares listed on the Spanish Stock Exchanges was €1.858 (equivalent to U.S.$2.03 based on the exchange rate as published by the ECB on such date).

On July 5, 2024, BBVA’s extraordinary general shareholders’ meeting approved to authorize the increase of BBVA’s share capital in an amount of up to €551,906,524.05 through the issuance of up to 1,126,339,845 newly-issued BBVA shares to be offered to the holders of Banco Sabadell shares pursuant to the exchange offer, with shareholders representing 70.75% of the outstanding BBVA shares present at such meeting and 96.01% of such shareholders voting in favor.

See “Risk Factors” in this offer to exchange/prospectus beginning on page 34 for a discussion of various risk factors that you should consider before deciding whether or not to tender your Banco Sabadell shares into the exchange offer.

Neither the U.S. Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of the securities to be issued in the transactions described in this offer to exchange/prospectus or passed upon the adequacy or accuracy of this offer to exchange/prospectus. Any representation to the contrary is a criminal offense.

The date of this offer to exchange/prospectus is , 2024

TABLE OF CONTENTS


	Page
REGULATORY STATEMENT		1

QUESTIONS AND ANSWERS ABOUT THE PROPOSED EXCHANGE OFFER		2

WHERE YOU CAN FIND MORE INFORMATION		12

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE		13

NOTE ON BANCO SABADELL INFORMATION		15

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		17

SUMMARY		20

RISK FACTORS		34

UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION		49

COMPARATIVE MARKET PRICE AND DIVIDEND PER SHARE INFORMATION		63

INFORMATION ABOUT BBVA		64

INFORMATION ABOUT BANCO SABADELL		66

BACKGROUND OF THE EXCHANGE OFFER		99

BBVA’S REASONS FOR THE PROPOSED EXCHANGE OFFER		101

THE EXCHANGE OFFER		104

DESCRIPTION OF BBVA SHARES		138

COMPARISON OF RIGHTS OF HOLDERS OF BBVA SHARES AND BANCO SABADELL SHARES		153

VALIDITY OF SECURITIES		156

EXPERTS		156

ENFORCEABILITY OF CIVIL LIABILITIES		156

APPENDIX I		A-1

This offer to exchange/prospectus incorporates by reference important business and financial information about BBVA that is contained in its filings with the SEC but which is not included in, or delivered with, this offer to exchange/prospectus. This information is available on the SEC’s website at www.sec.gov and from other sources. For more information about how to obtain copies of these documents, see “Where You Can Find More Information” in this offer to exchange/prospectus beginning on page 12. BBVA will also make copies of the reports incorporated by reference in this document available to you without charge upon your written or oral request to Sodali & Co., whose contact details can be found on page 12. In order to receive timely delivery of these documents, you must make such a request no later than five U.S. business days before the then-scheduled expiration date of the exchange offer. This deadline is currently , 2024 because the expiration date of the exchange offer is currently , 2024, but the actual deadline will be different if the exchange offer is extended.

REGULATORY STATEMENT

Pursuant to exemptive relief granted on May 29, 2024 by the SEC from Rule 14e-5 under the Exchange Act (as defined herein), and subject to certain enumerated conditions set forth in the relief letter, BBVA, BBVA’s subsidiaries and their respective affiliates and separately identifiable departments (collectively, the “BBVA Prospective Purchasers”) may purchase or arrange to purchase Banco Sabadell shares, securities that are immediately convertible into, exchangeable for or exercisable for Banco Sabadell shares, and various derivatives related to such securities (collectively, “Banco Sabadell Securities”) prior to and during the conduct of, but outside of, the exchange offer in the ordinary course of their businesses. Such purchases or arrangements to purchase may not be carried out for the purpose of promoting or otherwise facilitating the exchange offer or for the purpose of creating actual, or apparent, active trading in, or maintaining, or affecting the prices of the Banco Sabadell Securities.

For a description of the trading activities included within the scope of the SEC’s relief, see “The Exchange Offer—Relief Requested from the SEC—Tender Offer Rules Exemptive Relief”.

The BBVA Prospective Purchasers intend to effect such purchases in the ordinary course of their businesses in reliance on the relief granted by the SEC, subject to the conditions imposed by the SEC and otherwise in accordance with applicable law.

QUESTIONS AND ANSWERS ABOUT THE PROPOSED EXCHANGE OFFER

The summary term sheet in question-and-answer format set forth below highlights selected information about the exchange offer that is included elsewhere in this offer to exchange/prospectus. It does not, however, contain all of the information included in, or incorporated by reference into, this offer to exchange/prospectus and you should read and consider all such information carefully before deciding whether or not to tender your Banco Sabadell shares into the exchange offer.

Q.	Who is offering to acquire my Banco Sabadell shares?

The exchange offer is being undertaken by BBVA, the parent company of the BBVA Group. The BBVA Group is a customer-centric global financial services group founded in 1857. Internationally diversified and with strengths in retail banking, asset management and wholesale banking, the BBVA Group is committed to offering a compelling digital proposition focused on customer experience. BBVA has a leadership position in the Spanish market, it is the largest financial institution in Mexico in terms of assets, it has leading franchises in South America, and it is the majority shareholder in Garanti BBVA, Turkey’s largest bank in terms of market capitalization. The BBVA Group had consolidated assets of €759,534 million and €775,558 million as of June 30, 2024 and December 31, 2023, respectively, and net attributable profit/(loss) of €4,994 million and €8,019 million for the six months ended June 30, 2024 and the year ended December 31, 2023, respectively.

Additional information about the BBVA Group is included in its 2023 Form 20-F (as defined herein) and BBVA First Half 2024 Results Form 6-K (as defined herein), which are incorporated by reference in this offer to exchange/prospectus.

Q.	What is BBVA proposing to do?

A.	BBVA is undertaking an exchange offer to acquire all of the Banco Sabadell shares. Pursuant to the exchange offer, BBVA is offering one newly-issued BBVA share and €0.29 in cash for each 5.0196 Banco Sabadell shares tendered and not withdrawn.

Q.	Why is BBVA making this exchange offer?

As explained in “BBVA’s Reasons for the Proposed Exchange Offer”, BBVA is undertaking the exchange offer to acquire control of Banco Sabadell in order to be in a position to, subject to relevant approvals, integrate both businesses and create a stronger combined group through the merger of both companies, which is expected to result in:

the achievement of a larger scale in a highly competitive sector, resulting in higher efficiency. Scale is essential in the financial sector in order to be able to meet increasing fixed costs associated with the investments in technology that will need to be made over the next few years in the face of changing client needs;

ii.

the creation of a franchise that combines the financial results of both entities, capturing substantial cost synergies, which BBVA has projected at approximately €850 million per year before taxes for Spain and Mexico, once they are fully realized;

iii.

the combination of very complementary businesses, both in terms of geographical diversification and in terms of the positioning in different client segments in Spain; and

iv.

a combined group with ample solvency (CET1 above 12%) and a higher resilience to external shocks and a lower vulnerability through economic cycles due to increased diversification.

Additionally, BBVA believes that the intended merger, if completed, will have a positive impact on the clients and employees of both entities and society as a whole.

Q.	How is the exchange offer structured?

BBVA is undertaking the exchange offer pursuant to the offering documents published (or that will be published) in Spain and made available (or that will be made available) to all shareholders of Banco Sabadell and this offer to exchange/prospectus, for legal reasons to comply with Spanish and U.S. regulatory requirements.

Q.	Can I tender my Banco Sabadell shares into the exchange offer?

A.	If you are a U.S. holder of Banco Sabadell shares, you can tender them into the exchange offer and you will receive BBVA shares in exchange for your Banco Sabadell shares if the exchange offer is completed.

Q.	Has BBVA discussed the offer with Banco Sabadell’s board of directors?

A.	In evaluating the exchange offer, you should be aware that BBVA has not negotiated the price or terms of the exchange offer with Banco Sabadell and neither Banco Sabadell nor its board of directors has approved the exchange offer.

On April 17, 2024, the Chair of BBVA and the Chairman of Banco Sabadell had a meeting in which the Chair of BBVA informed the Chairman of Banco Sabadell of BBVA’s strategic and financial interest in resuming the merger discussions with Banco Sabadell (by reference to the merger transaction discussed between BBVA and Banco Sabadell in 2020 without reaching an agreement), with a view to creating a leading bank, with greater scale and competitive capacity. On April 30, 2024 due to a media report regarding the abovementioned discussions between the Chair of BBVA and the Chairman of Banco Sabadell, BBVA published an inside information notice confirming that the Chairman of Banco Sabadell had been informed of BBVA’s board of directors’ interest in initiating negotiations with Banco Sabadell to explore a potential merger of BBVA and Banco Sabadell. On that same day, BBVA made an indicative proposal in writing to Banco Sabadell relating to a corporate transaction, consisting of the proposed combination of the BBVA Group and the Banco Sabadell Group, through a merger between Banco Sabadell and BBVA (which was published as an inside information notice of BBVA on May 1, 2024 and registered with the Spanish Securities Market Commission (Comisión Nacional del Mercado de Valores, “CNMV”), with registry number 2232). On May 6, 2024, Banco Sabadell published an inside information notice registered with the CNMV, with registry number 2234, rejecting BBVA’s proposal.

See “Background of the Exchange Offer” in this offer to exchange/prospectus beginning on page 99 for more information.

Q.	Has Banco Sabadell or its board of directors made any recommendation regarding the exchange offer?

As of the date of this offer to exchange/prospectus, Banco Sabadell’s board of directors has not formally made any recommendation to its shareholders in connection with the exchange offer. However, Banco Sabadell’s respective Chairman and Chief Executive Officer have publicly manifested their opposition to the exchange offer. Under Spanish law, within ten calendar days after the start of the acceptance period, the board of directors of Banco Sabadell is required to issue and publish a detailed and justified report on the exchange offer that must contain, among other items, its comments for and against the exchange offer, disclosure on any agreement that may exist between Banco Sabadell and BBVA or the directors or shareholders thereof, or between any of them and the board members of Banco Sabadell in relation to the exchange offer, the opinion of Banco Sabadell’s directors with respect to the exchange offer, their intention to tender (or not) the Banco Sabadell shares that they directly or indirectly hold into the exchange offer and the existence and nature of any conflict of interest. The report must also contain the potential consequences of the exchange offer on, and the strategic plans of BBVA with respect to, Banco Sabadell, its employees and the location of its activity centers disclosed by BBVA in the offering documents published in Spain. Further, under Rule 14e-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Banco

Sabadell, no later than ten U.S. business days from the date the exchange offer is first published, sent or given, will need to disclose its position (or inability to take a position) with respect to the exchange offer.

Q.	What will I receive if I tender my Banco Sabadell shares and the exchange offer is completed?

If you tender, and do not withdraw, your Banco Sabadell shares into the exchange offer and the exchange offer is completed, you will receive one newly-issued BBVA share and €0.29 in cash for each 5.0196 Banco Sabadell shares tendered. The treatment of fractional shares is described in the following question.

Q.	Will I receive fractional BBVA shares or a fraction of the exchange offer cash consideration?

With respect to the exchange offer cash consideration, tendering holders of Banco Sabadell shares that tender a number of Banco Sabadell shares that does not entitle them to receive at least one newly-issued BBVA share, or that entitles them to receive a whole number of newly-issued BBVA shares but have an excess number of Banco Sabadell shares that would entitle them to receive the above cash payment in lieu of a fractional BBVA share, will receive an amount in cash equal to €0.29 multiplied by the fraction of a BBVA share (rounded to the nearest hundredth with five one thousandths of a BBVA share being rounded upwards (e.g., 0.205 would be rounded to 0.21)) that they would otherwise be entitled to receive in accordance with the exchange ratio of 5.0196 (adjusted, as the case may be, as described in this offer to exchange/prospectus). Such amount in cash will be rounded to the nearest euro cent and, in the event of a half of a euro cent, to the immediately higher euro cent. Under no circumstances will interest be paid on the exchange offer cash consideration.

Q.	If Banco Sabadell and/or BBVA pay any dividends before settlement of the exchange offer, will such dividend payment affect the consideration I will receive in exchange for my Banco Sabadell shares?

If Banco Sabadell makes any distribution of dividends, reserves or any other type of distribution to its shareholders (regardless of whether it is an ordinary, extraordinary, interim or complementary distribution) prior to the settlement of the exchange offer or, if applicable, after the settlement of the exchange offer but before the settlement of a subsequent squeeze-out transaction, the share exchange offered as consideration in the exchange offer or in such subsequent squeeze-out transaction, or both, as applicable, will be adjusted accordingly by an amount equal to the gross amount of the distribution per Banco Sabadell share. The adjustment will be made taking into account the weighted average price per BBVA share during the three-month period prior to the publication of BBVA’s announcement of its intention to make the exchange offer and the equivalent price per Banco Sabadell share resulting from the application of the original exchange ratio of 4.83, that is €10.24 per BBVA share and €2.12 per Banco Sabadell share. On October 1, 2024, Banco Sabadell paid a dividend of €0.08 per Banco Sabadell share and, as a result, the applicable exchange ratio was adjusted from the original exchange ratio of one newly-issued BBVA share for each 4.83 Banco Sabadell shares to one newly-issued BBVA share for each 5.0196 Banco Sabadell shares (which is the result of dividing €10.24 per BBVA share by €2.04 per ex-dividend Banco Sabadell share).

Q.	If I tender my Banco Sabadell shares into the exchange offer, what upcoming dividends of Banco Sabadell and BBVA will I receive?

If you tender, and do not withdraw, your Banco Sabadell shares into the exchange offer and the exchange offer is completed, you will receive BBVA shares in exchange for your Banco Sabadell shares. As a holder of BBVA shares you will be entitled to receive any dividends paid to BBVA shareholders following the settlement of the exchange offer. BBVA’s current dividend policy involves distributing between 40% and 50% of its consolidated net attributable profit annually, combining cash dividends and share buybacks. BBVA is committed to distributing capital in excess of what is required to maintain a 12% CET1 ratio (subject to any restrictions imposed by, and the approval of, relevant supervisory bodies and BBVA’s corporate bodies, as applicable).

If you do not participate in the exchange offer, you will continue to hold your Banco Sabadell shares and therefore you will continue to be entitled to receive any dividends paid on your Banco Sabadell shares by Banco Sabadell.

Q.	How do I tender my Banco Sabadell shares in the exchange offer?

Holders of Banco Sabadell shares who wish to tender their Banco Sabadell shares into the exchange offer must submit their declaration of acceptance in writing to the Spanish clearing system (Sociedad de Gestión de los Sistemas de Registro, Compensación y Liquidación de Valores, S.A.U. (“Iberclear”)) participant where their Banco Sabadell shares are deposited, either in person, by electronic means or by any other means permitted by such Iberclear participant.

Q.	What is the total consideration worth?

The equivalent cash consideration per Banco Sabadell share resulting from the application of the weighted average price per BBVA share in the three-month period before the publication of BBVA’s announcement of its intention to make the exchange offer to the exchange ratio, in accordance with Article 14.4 of Royal Decree 1066/2007 (the “Spanish Takeover Regulation”), is €2.12 per Banco Sabadell share. Such equivalent cash consideration is provided for illustrative purposes only. The price of the BBVA shares fluctuates and may be higher or lower than the equivalent cash consideration set forth above at the time Banco Sabadell shares are exchanged pursuant to the exchange offer.

Q.	Will I have to pay any fees or commissions for tendering my Banco Sabadell shares?

Holders of Banco Sabadell shares who tender their Banco Sabadell shares through BBVA, as agent bank, will not bear the brokerage expenses resulting from the participation of a member entity of the Spanish Stock Exchanges, nor Iberclear’s liquidation fees, nor, if applicable, fees resulting from contracting with the Spanish Stock Exchanges, which will be paid in full by BBVA.

If a member entity of the Spanish Stock Exchanges or an Iberclear participant (other than BBVA) intervenes on behalf of a holder of Banco Sabadell shares who tenders its Banco Sabadell shares into the exchange offer, all brokerage and other costs, including Iberclear’s liquidation fees and fees resulting from contracting with the Spanish Stock Exchanges, must be borne by such tendering holder. Under no circumstances will BBVA be responsible for any commissions and expenses that any depository and administrative entities may charge to holders of Banco Sabadell shares for the submission of any declaration of acceptance and the deposit of their respective Banco Sabadell shares.

The expenses incurred by BBVA in the acquisition of the Banco Sabadell shares and their respective settlement, including any expenses derived from the payment of any fractional shares, will be borne by BBVA.

Q.	How much time do I have to decide whether to tender?

A.	If you hold Banco Sabadell shares and would like to tender them into the exchange offer, you should follow the procedures described under “The Exchange Offer—Procedure for Tendering” in this offer to exchange/prospectus beginning on page 111.

Q.	When does the exchange offer expire?

A.	The exchange offer will expire at 17:59:59 p.m. Eastern time (23:59:59 p.m. Central European time) on the expiration date. The expiration date is currently , 2024, but this date will change if the exchange offer is extended.

Q.	Can the exchange offer be extended?

Yes. BBVA may extend the period of time in which the exchange offer is open one or more times in accordance with the provisions of article 23 of the Spanish Takeover Regulation, provided that such extension complies with U.S. securities laws, and, provided further that the acceptance period does not exceed 70 calendar days and that any extension is communicated in advance to the CNMV. The extension of the acceptance period, if any, must be announced at least three calendar days before the then-scheduled expiration date of the acceptance period, indicating the circumstances that motivate such extension. If BBVA extends the period of time during which the exchange offer is open, the exchange offer will expire at the latest time and date to which BBVA extends the exchange offer. The CNMV may also extend the exchange offer acceptance period at its own discretion under the circumstances set forth in the Spanish Takeover Regulation, including (i) following a supplement to the offering documents published (or that will be published) in Spain when the CNMV considers that the materiality of the information disclosed in such supplement makes the extension of the exchange offer appropriate; or (ii) in other cases where the CNMV deems such extension necessary, through a justified resolution and to the extent legally possible.

Q.	Can I withdraw any Banco Sabadell shares that I have tendered?

Holders of Banco Sabadell shares may withdraw their declarations of acceptance at any time prior to the last day of the acceptance period by submitting their declaration of withdrawal in writing to the Iberclear participant where their Banco Sabadell shares are deposited, either in person, by electronic means or by any other means permitted by such Iberclear participant. Pursuant to article 34 of the Spanish Takeover Regulation, any declaration of withdrawal subject to a condition will be null and void.

Q.	When is the exchange offer expected to be completed?

Completion of the exchange offer will take place on the settlement date, provided that each of the conditions set forth in “The Exchange Offer—Conditions to Completion of the Exchange Offer” has been satisfied or waived (to the extent permitted by law, including in accordance with any applicable timing limitations).

Q.	Has the exchange offer been subject to the ECB non-opposition?

Pursuant to the provisions of Law 10/2014, of June 26, on the regulation, supervision and solvency of credit institutions, and Royal Decree 84/2015, of February 13, implementing Law 10/2014, of June 26, on the regulation, supervision and solvency of credit institutions, the acquisition by BBVA of control of Banco Sabadell resulting from the exchange offer was subject to the duty of prior notification to the Bank of Spain and to the obtainment of the non-opposition by the ECB. The ECB’s non-opposition was obtained on September 5, 2024.

Q.	What are the conditions to the exchange offer?

In accordance with the provisions of articles 13 and 26 of the Spanish Takeover Regulation, the exchange offer is subject to the fulfillment of the following conditions:

In accordance with the provisions of article 13.2.b) of the Spanish Takeover Regulation, the acceptance of the exchange offer by at least a number of shares of Banco Sabadell representing 50.01% of its share capital (2,720,654,746 Banco Sabadell shares as of the date of this offer to exchange/prospectus).

ii.

In accordance with the provisions of article 13.2.d) of the Spanish Takeover Regulation, the approval by BBVA’s general shareholders’ meeting of the increase of its share capital through the issue of new BBVA shares with non-cash contributions in an amount which is sufficient to fully cover the consideration offered to the shareholders of Banco Sabadell pursuant to the exchange offer. This condition was satisfied on July 5, 2024.

iii.

In accordance with the provisions of article 26.1 of the Spanish Takeover Regulation, the authorization of the economic concentration resulting from the exchange offer by the Spanish antitrust authorities.

iv.

In accordance with the provisions of article 13.2.d) of the Spanish Takeover Regulation, the authorization of the indirect acquisition of control of Banco Sabadell’s banking subsidiary in the United Kingdom, TSB Bank PLC (“TSB”), by the Prudential Regulation Authority (“PRA”). This condition was satisfied on September 2, 2024.

For the exchange offer to be completed, each of these conditions must have been satisfied or waived (to the extent permitted by law, including in accordance with any applicable timing limitations). As of the date of this offer to exchange/prospectus, conditions (i) and (iii) above remain outstanding. BBVA does not intend to waive condition (i) above. Consequently, if at least a number of Banco Sabadell shares representing 50.01% of its share capital do not accept the exchange offer, the exchange offer will not be completed.

According to the Spanish Takeover Regulation, if the Spanish antitrust authorities declare the proposed exchange offer inappropriate before the end of the acceptance period, BBVA will be required to withdraw the exchange offer. In addition, pursuant to the Spanish Takeover Regulation, BBVA may, at its discretion, waive the condition referred to in (iii) above or withdraw the exchange offer if before the end of the acceptance period the Spanish antitrust authorities (i) approve the economic concentration resulting from the exchange offer subject to the fulfillment of any condition (in which case, BBVA will evaluate the expected consequences of such condition to determine whether to waive the condition and continue with completion of or withdraw the exchange offer) or (ii) have not given their express (whether conditional or unconditional) or tacit authorization of the economic concentration resulting from the exchange offer.

Q.	Do I need to do anything if I want to retain my Banco Sabadell shares?

A.	No. If you want to retain your Banco Sabadell shares, you do not need to take any action.

Q.	Do I need to vote at any meeting to approve the exchange offer?

A.	Your vote is not required in connection with the exchange offer. You simply need to tender your Banco Sabadell shares during the acceptance period, if you choose to do so.

Q.	Will tendered shares be subject to proration?

A.	No. Subject to the terms and conditions of the exchange offer, BBVA will acquire any and all Banco Sabadell shares validly tendered into, and not withdrawn from, the exchange offer.

Q.	If I do not participate in the exchange offer, will my Banco Sabadell shares continue to be listed on the Spanish Stock Exchanges? Can BBVA squeeze-out the holders of Banco Sabadell shares that do not tender into the exchange offer?

The exchange offer is not a delisting offer so if you do not participate in the exchange offer and the exchange offer is completed, you will continue to hold your Banco Sabadell shares and your Banco Sabadell shares will continue to be listed. However, if the requirements set forth in articles 116 of the Law 6/2023, of March 17, on the Securities Markets and Investment Services, as amended (Ley 6/2023, de 17 de marzo, de los Mercados de Valores y de los Servicios de Inversión, the “Spanish Securities Market Law”) and 47 of the Spanish Takeover Regulation are met, which would require that (i) the exchange offer is accepted by holders of Banco Sabadell shares representing at least 90% of the Banco Sabadell shares subject to the exchange offer; and (ii) following completion of the exchange offer, BBVA holds a number of Banco Sabadell shares representing at least 90% of the voting rights in Banco Sabadell’s share capital, BBVA will exercise its right to demand the squeeze-out of the remaining Banco Sabadell shares at the same consideration as offered pursuant to the exchange offer (adjusted, as the case may be, as described in this offer to exchange/prospectus). To this effect, within the three Spanish stock exchange business days following the publication of the results of the exchange offer on the website of the CNMV, BBVA will communicate to the CNMV and publicly announce whether or not the requirements to execute a squeeze-out transaction have been met. In that announcement, or within the two following Spanish stock exchange business days, BBVA will announce the date of the squeeze-out transaction. In accordance with article 48.4 of the Spanish Takeover Regulation, such date will be fixed between the 15^th and the 20^th Spanish business day following the date of such announcement. Such decision will be irrevocable. Upon settlement of such squeeze-out transaction, the Banco Sabadell shares will be automatically delisted from the Spanish Stock Exchanges.

Q.	Will there be a merger between BBVA and Banco Sabadell?

The exchange ratio of any such merger must be validated, on the basis of the fair value of the equity of the entities participating in the merger, by an independent expert appointed for such purpose by the relevant commercial registry, in accordance with applicable Spanish law, and may ultimately differ from the consideration offered in the exchange offer. A joint merger plan would need to be formulated by BBVA’s

and Banco Sabadell’s respective boards of directors and approved by BBVA’s and Banco Sabadell’s respective shareholders, and its consummation would require the prior authorization of the Ministry of Economy, Trade and Business in accordance with the provisions of the twelfth additional provision of Law 10/2014, of June 26, on the regulation, supervision and solvency of credit institutions and related regulations. See “The Exchange Offer—Certain Consequences of the Exchange Offer—Squeeze-out and Merger”. If the intended merger is not consummated for any reason, BBVA will not pursue a delisting offer over the Banco Sabadell shares for at least 12 months following the settlement of the exchange offer.

While it is BBVA’s intention to effect a merger by absorption, BBVA is not obligated to consummate such a merger following completion of the exchange offer or to consummate it on the same terms as the exchange offer. As noted above, BBVA’s intention is to apply in any such merger an exchange ratio equivalent, as far as possible, to the consideration offered in the exchange offer. However, the exchange ratio applicable in any such merger must be validated by an independent expert and may ultimately differ from the consideration offered in the exchange offer. Further, any such merger would need BBVA’s and Banco Sabadell’s respective boards of directors to formulate a joint merger plan, which would need to be approved by BBVA’s and Banco Sabadell’s respective shareholders. The consummation of the merger would require the prior authorization of the Spanish Economy, Trade and Business Minister, following the issuance of related reports by certain regulators and authorities that will have previously issued favorable opinions with respect to the exchange offer. If any of the foregoing corporate approvals or the authorization from the Economy, Trade and Business Minister is not obtained, the merger will not be consummated. Following completion of the exchange offer, BBVA will be able to appoint the majority of the members of the board of directors of Banco Sabadell and exercise at least 50.01% of Banco Sabadell’s voting rights. BBVA is not aware of any Spanish precedent transaction where the authorization of a merger following the acquisition of control of a credit institution, as contemplated by this offer to exchange/prospectus has not been granted by the Spanish Economy, Trade and Business Minister. In light of the foregoing, BBVA considers that the scenario of not being able to consummate the intended merger is very remote. See “The Exchange Offer—Certain Consequences of the Exchange Offer—Squeeze-out and Merger”. For further information regarding BBVA’s plans with respect to Banco Sabadell if the intended merger is not consummated for any reason, please see “The Exchange Offer—Plans for Banco Sabadell after the Exchange Offer—Planned Corporate Restructuring Transactions of Any Kind”.

Q.	Will the BBVA shares to be delivered to the holders of the Banco Sabadell shares who tender their Banco Sabadell shares into the exchange offer be publicly listed on the Spanish Stock Exchanges?

Yes. BBVA will request the admission to trading of the newly-issued BBVA shares that the holders of the Banco Sabadell shares who tender, and do not withdraw, their Banco Sabadell shares into the exchange offer will receive in exchange for their Banco Sabadell shares if the exchange offer is completed, within five Spanish stock exchange business days from the registration of such BBVA shares in the registries of Iberclear. Such admission to trading is expected to take place as soon as possible thereafter.

Q.	Will I have appraisal rights in connection with the exchange offer?

A.	No. There are no appraisal or similar rights available to holders of Banco Sabadell shares in connection with the exchange offer.

Q.	How and where will the outcome of the exchange offer be announced?

In accordance with the provisions of article 36 of the Spanish Takeover Regulation, upon expiration of the acceptance period, and within a maximum period of seven Spanish stock exchange business days from that date, the governing bodies of the Spanish Stock Exchanges will publish the result of the exchange offer in the Official Quotation Bulletins, upon the terms and on the trading session expressly indicated by the CNMV.

Q.	What are the tax consequences if I participate in the exchange offer?

For more information on certain material Spanish and U.S. tax consequences of the exchange offer, see “The Exchange Offer—Spanish Tax Consequences for U.S. Shareholders” and “The Exchange Offer—Material U.S. Federal Income Tax Considerations for U.S. Holders” in this offer to exchange/prospectus beginning on pages 116 and 120, respectively. You should consult your tax advisor on the tax consequences to you of tendering your Banco Sabadell shares in the exchange offer.

Q.	Is BBVA’s financial condition relevant to my decision to tender my Banco Sabadell shares into the exchange offer?

Yes. If the exchange offer is completed, you will receive BBVA shares as consideration in the exchange offer. Consequently, you should consider BBVA’s financial condition before you decide to become one of BBVA’s shareholders through the exchange offer. The BBVA Group had consolidated assets of €759,534 million and €775,558 million as of June 30, 2024 and December 31, 2023, respectively, and net attributable profit/(loss) of €4,994 million and €8,019 million for the six months ended June 30, 2024 and the year ended December 31, 2023, respectively. In considering BBVA’s financial condition, you should also review the documents incorporated by reference in this offer to exchange/prospectus because they contain detailed business, financial and other information about us.

Q.	If BBVA acquires all of the Banco Sabadell shares in the exchange offer, what percentage of BBVA shares will former holders of Banco Sabadell shares own after completion of the exchange offer?

If all of the Banco Sabadell shares are validly tendered and exchanged, pursuant to the terms of the exchange offer, immediately after the exchange offer: (i) the former holders of Banco Sabadell shares will own approximately 16% of the share capital and voting rights of BBVA; and (ii) the current holders of BBVA shares will hold approximately 84% of the share capital and voting rights of BBVA.

Q.	If my Banco Sabadell shares are acquired in the exchange offer, how will my rights as a Banco Sabadell shareholder change?

If your Banco Sabadell shares are acquired in the exchange offer, you will become a holder of BBVA shares. The rights of a holder of BBVA shares will be governed by BBVA’s bylaws, its general shareholders’ meeting’s regulations and the Spanish corporation law (Texto Refundido de la Ley de Sociedades de Capital aprobado por el Real Decreto Legislativo 1/2010), as amended (the “Spanish Corporation Law”). For a summary of the material differences between the rights of holders of BBVA shares compared to the rights of holders of Banco Sabadell shares, see “Comparison of Rights of Holders of BBVA Shares and Banco Sabadell Shares” in this offer to exchange/prospectus beginning on page 153.

Q.	When will I receive my BBVA shares?

Under Spanish law, a number of procedural steps must be taken after the exchange offer is completed and before BBVA shares can be delivered. If the exchange offer is completed, BBVA expects that you will receive the BBVA shares you are entitled to receive pursuant to the exchange offer no later than the 14^th Spanish stock exchange business day following the expiration date and, if not possible within that timeframe, in any event, you will receive them no later than the 20^th Spanish stock exchange business day following the expiration date, in accordance with customary Spanish market practice. It is expected that the payment of cash in lieu of fractional BBVA shares will be made on the same date as the delivery of the BBVA shares.

Q.	What if the exchange offer is not completed?

A.	If the exchange offer is not completed you will continue to be the holder of your Banco Sabadell shares.

Q.	Can I tender less than all the Banco Sabadell shares that I own into the exchange offer?

A.	Yes. You may elect to tender all or a portion of the Banco Sabadell shares that you own into the exchange offer.

Q.	Where can I find out more information about BBVA?

A.	You can find out information about BBVA from the sources described under “Where You Can Find More Information” in this offer to exchange/prospectus.

Q.	Who can I call with questions?

If you have more questions about the exchange offer, you should contact Sodali & Co. at the following address, telephone number or email: 430 Park Avenue, 14^th Floor, New York, New York, 10022, United States of America; (800) 662-5200 (in North America) or +1 (203) 658-9400 (outside of North America); BBVA@info.sodali.com.

WHERE YOU CAN FIND MORE INFORMATION

BBVA files annual reports on Form 20-F with, and furnishes other reports and information on Form 6-K to, the SEC. The SEC maintains an Internet site at http://www.sec.gov that contains in electronic form the reports and other information that BBVA has electronically filed with, or furnished to, the SEC. BBVA maintains a website at https://shareholdersandinvestors.bbva.com.

With the exception of the reports specifically incorporated by reference in this document as set forth in “Incorporation of Certain Information by Reference”, material contained on or accessible through BBVA’s website is not incorporated into this document.

You may obtain a copy of BBVA’s reports at no cost to you from the SEC at the SEC’s website (http://www.sec.gov) or, with respect to reports incorporated by reference in this document, by writing or calling Sodali & Co. at the following address, telephone number or email:

Sodali & Co.

430 Park Avenue, 14^th Floor

New York, New York, 10022

United States of America

Telephone: (800) 662-5200 (in North America) or +1 (203) 658-9400 (outside of North America)

Email: BBVA@info.sodali.com

BBVA has filed with the SEC a registration statement on Form F-4 (the “Registration Statement”) to register under the Securities Act of 1933, as amended (the “Securities Act”), the offer and sale of BBVA shares pursuant to the U.S. tranche of the exchange offer. This offer to exchange/prospectus forms a part of that Registration Statement.

DOCUMENTS INCORPORATED BY REFERENCE ARE ALSO AVAILABLE FROM BBVA WITHOUT CHARGE UPON REQUEST TO SODALI & CO. IN ORDER TO ENSURE TIMELY DELIVERY OF ANY OF THESE DOCUMENTS, ANY REQUEST SHOULD BE SUBMITTED NO LATER THAN FIVE U.S. BUSINESS DAYS PRIOR TO THE THEN-SCHEDULED EXPIRATION DATE OF THE EXCHANGE OFFER. THIS DEADLINE IS CURRENTLY , 2024 BECAUSE THE EXPIRATION DATE OF THE EXCHANGE OFFER IS CURRENTLY , 2024 BUT THE ACTUAL DEADLINE WILL BE DIFFERENT IF THE EXCHANGE OFFER IS EXTENDED. IF YOU REQUEST ANY INCORPORATED DOCUMENTS FROM SODALI & CO., SODALI & CO. WILL RESPOND TO YOUR REQUEST WITHIN ONE U.S. BUSINESS DAY AFTER SODALI & CO. RECEIVES YOUR REQUEST, AND SEND YOU THE INCORPORATED DOCUMENTS BY FIRST CLASS MAIL OR OTHER EQUALLY PROMPT MEANS.

All information contained in this document relating to Banco Sabadell has been taken from publicly-available sources published by Banco Sabadell. Furthermore, any assumptions and/or estimates that BBVA has made relating to Banco Sabadell in connection with the exchange offer are based solely on publicly-available information. Information provided by either BBVA or Banco Sabadell does not constitute any representation, estimate or projection of the other.

BBVA has not authorized anyone to give any information or make any representation about the exchange offer that is different from, or in addition to, the information contained in this offer to exchange/prospectus or in any materials incorporated by reference into this offer to exchange/prospectus. The information contained in this offer to exchange/prospectus speaks only as of the date of this offer to exchange/prospectus unless the information specifically indicates that another date applies.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The rules of the SEC allow BBVA to “incorporate by reference” the information BBVA files with, or furnishes to, the SEC, which means:

•

incorporated documents are considered part of this offer to exchange/prospectus;

•

BBVA can disclose important information to you by referring you to those documents; and

•

information that BBVA files with, or furnishes to, the SEC in the future and incorporates by reference in this offer to exchange/prospectus will automatically update and supersede information in this offer to exchange/prospectus and information previously incorporated by reference in this offer to exchange/prospectus.

This means that you must look at all of the SEC filings that BBVA incorporates by reference to determine if any of the statements in this offer to exchange/prospectus or in any document previously incorporated by reference have been modified or superseded.

BBVA incorporates by reference the following documents:

•

BBVA’s annual report on Form 20-F for the year ended December 31, 2023 filed with the SEC on March 1, 2024 (the “2023 Form 20-F”) ;

•

BBVA’s report on Form 6-K containing certain information on BBVA’s financial results as of and for the six months ended June 30, 2024 and certain other updates, furnished to the SEC on July 30, 2024 (Accession No. 0000842180-24-000026) (the “BBVA First Half 2024 Results Form 6-K”); and

•

any filings made by BBVA with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, as well as any report on Form 6-K furnished to the SEC to the extent the Form 6-K expressly states that it is being incorporated by reference herein, on or after the date of this offer to exchange/prospectus and prior to the termination of the exchange offer under this offer to exchange/prospectus.

As you read the above documents, you may find inconsistencies in information from one document to another. If you find inconsistencies, you should rely on the statements made in the most recent document.

You may obtain a copy of these documents at no cost to you (other than exhibits not specifically incorporated by reference) from the SEC at the SEC’s website (http://www.sec.gov) or by writing or telephoning Sodali & Co. at the following address, telephone number or email:

Sodali & Co.

430 Park Avenue, 14^th Floor

New York, New York, 10022

United States of America

Telephone: (800) 662-5200 (in North America) or +1 (203) 658-9400 (outside of North America)

Email: BBVA@info.sodali.com

Upon your request, Sodali & Co. will provide to you without charge copies of any or all reports and documents described above that are incorporated by reference into this offer to exchange/prospectus (other than exhibits to such documents, unless such exhibits are specifically incorporated by reference). Requests for such copies should be directed to Sodali & Co. at 430 Park Avenue, 14^th Floor, New York, New York, 10022, United States of America; (800) 662-5200 (in North America) or +1 (203) 658-9400 (outside of North America); BBVA@info.sodali.com. To obtain timely delivery of any of these documents, you must request them no later than five U.S. business days before the then-scheduled expiration date of the exchange offer. This deadline is currently , 2024 because the expiration date of the exchange offer is currently , 2024, but the actual deadline will be different if the exchange offer is extended.

BBVA has provided only the information contained in, or incorporated by reference into, this offer to exchange/prospectus in deciding whether or not to accept the exchange offer. BBVA has not authorized anyone to provide you with any information that is different from what is contained in, or incorporated by reference into, this offer to exchange/prospectus. The information contained in, or incorporated by reference into, this offer to exchange/prospectus is accurate only as of its date. You should not assume that such information is accurate as of any other date and neither the mailing of this offer to exchange/prospectus to you nor the issuance of BBVA shares in connection with the exchange offer shall create any implication to the contrary.

NOTE ON BANCO SABADELL INFORMATION

General

All information contained in this offer to exchange/prospectus relating to Banco Sabadell has been taken from publicly-available sources published by Banco Sabadell (including, in particular, its consolidated financial statements as of and for the years ended December 31, 2023, 2022 and 2021, its condensed consolidated interim financial statements as of and for the six months ended June 30, 2024, its annual reports as of and for the years ended December 31, 2023, 2022 and 2021, its consolidated interim directors’ report for the first six months of 2024, its second quarter 2024 quarterly financial report and its Euro Medium Term Note Program base prospectus dated May 14, 2024) other than the description of Banco Sabadell’s actions taken in response to BBVA’s proposals as set forth under “Background of the Exchange Offer”. Additionally, the information relating to Banco Sabadell included under “Comparison of Rights of Holders of BBVA Shares and Banco Sabadell Shares” summarizes certain provisions of the Banco Sabadell bylaws publicly available on Banco Sabadell’s website. BBVA was not involved in the preparation of such publicly-available information regarding Banco Sabadell and cannot verify such information. Such information is included herein in order to comply with regulatory requirements. To the extent permitted under applicable law, none of BBVA or any of its officers or directors assumes any responsibility for the accuracy or completeness of such information or for any failure by Banco Sabadell to disclose events or facts which may have occurred or which may affect the significance or accuracy of any such information, but which are unknown to BBVA. Furthermore, any assumptions and/or estimates that BBVA has made relating to Banco Sabadell in connection with the exchange offer are based solely on publicly-available information.

BBVA is not affiliated with Banco Sabadell, and BBVA has not had access to Banco Sabadell’s books and records. Therefore, non-public information concerning Banco Sabadell was not used by BBVA for the purpose of preparing this offer to exchange/prospectus. Pursuant to Rule 409 under the Securities Act, BBVA has requested that Banco Sabadell provide BBVA with certain information regarding the business, operations and financial condition of Banco Sabadell. BBVA will amend or supplement this offer to exchange/prospectus to provide any information BBVA receives from Banco Sabadell, if BBVA receives the information on a timely basis before the expiration time and considers it to be material, complete, reliable and appropriate. Banco Sabadell is subject to special legislation applicable to credit entities in general, the supervision, control and regulation of the ECB, and, as a listed company, the regulatory oversight of the CNMV. It is also subject to European market abuse regulation.

Financial Information

This offer to exchange/prospectus includes as Appendix I the consolidated financial statements of Banco Sabadell as of and for the years ended December 31, 2023, 2022 and 2021 and the condensed consolidated interim financial statements of Banco Sabadell as of and for the six months ended June 30, 2024, which comprise the consolidated balance sheets as of December 31, 2023, 2022 and 2021 and June 30, 2024, respectively, and the consolidated income statements, consolidated statements of recognized income and expenses, consolidated statements of total changes in equity and consolidated cash flow statements for the periods then ended and explanatory notes. The comparative financial information as of and for the year ended December 31, 2022 included in the consolidated financial statements of Banco Sabadell as of and for the year ended December 31, 2023 has been restated to take into account the implementation of IFRS 17. BBVA is not affiliated with Banco Sabadell and was not involved in the preparation of the consolidated financial statements of Banco Sabadell as of and for the years ended December 31, 2023, 2022 and 2021 or the condensed consolidated interim financial statements of Banco Sabadell as of and for the six months ended June 30, 2024.

Certain of the financial information relating to Banco Sabadell included in this offer to exchange/prospectus has been derived from the consolidated financial statements of Banco Sabadell as of and for the years ended December 31, 2023, 2022 and 2021 and from the condensed consolidated interim financial statements of Banco Sabadell as of and for the six months ended June 30, 2024, each included as Appendix I to this offer to exchange/prospectus. Such consolidated financial statements have not been audited under U.S. GAAS and are therefore not considered audited financial statements under SEC rules. Consequently, no audit report has been included herein

on such consolidated financial statements. However, as a listed company in Spain, Banco Sabadell is subject to ongoing reporting requirements under CNMV rules, including that its annual financial statements be audited under prevailing legislation regulating the audit of accounts in Spain.

Description of Certain Differences Between IFRS-EU and IFRS-IASB

Banco Sabadell prepares its consolidated financial statements in accordance with IFRS as adopted by the European Union (“EU”) (“IFRS-EU”) while BBVA’s financial statements are prepared in compliance with IFRS as issued by the International Accounting Standards Board (“IFRS-IASB”). Based on BBVA’s reading of Banco Sabadell’s consolidated financial statements as of and for the year ended December 31, 2023, included below is a summary of the main difference between IFRS-EU and IFRS-IASB as they relate to Banco Sabadell. Holders of Banco Sabadell shares must rely upon their own knowledge of Banco Sabadell before deciding whether to tender their Banco Sabadell shares. Holders of Banco Sabadell shares should consult their own professional advisors for an understanding of the differences between IFRS-EU and IFRS-IASB, and the way these differences could impact the financial information included in this offer to exchange/prospectus.

The description of the main difference between IFRS-EU and IFRS-IASB as they relate to Banco Sabadell included below should not be taken as an exhaustive description of all differences between IFRS-EU and IFRS-IASB.

Macro hedging accounting

Based on BBVA’s reading of Banco Sabadell’s consolidated financial statements as of and for the year ended December 31, 2023, the main difference between IFRS-EU and IFRS-IASB as they relate to Banco Sabadell relates to the accounting of macro hedging related to certain portfolios. Macro hedging refers to the practice of managing risk at the portfolio level rather than at the level of individual transactions or pairs of transactions, as is typical in traditional hedging approaches. Companies applying macro hedging accounting have to demonstrate the effectiveness of the hedges and follow a detailed process for documenting and testing their effectiveness.

This difference between IFRS-EU and IFRS-IASB emerged during the EU’s endorsement process of IAS 39 “Financial Instruments: Recognition and Measurement”, whereby the EU made specific carve-outs to account for the prepayment risk associated with these portfolios and treat such risk as interest rate risk. This carve-out is not contemplated under IFRS-IASB, where the approach to macro hedges is focused on traditional risks, such as interest rate risk, exchange rate risk or market price risk, with prepayment risk not falling under the definition and criteria set forth under IAS 39 “Financial Instruments: Recognition and Measurement”.

Based on BBVA’s reading of Banco Sabadell’s consolidated financial statements as of and for the year ended December 31, 2023, BBVA believes that Banco Sabadell is applying hedge accounting to the prepayment risk associated with a portfolio of core deposits and to a mortgage portfolio. The use of this carve-out is not expressly disclosed in the explanatory notes of such financial statements as it is compliant with IFRS-EU.

According to Note 12 to Banco Sabadell’s consolidated financial statements as of and for the year ended December 31, 2023, the value adjustments on hedged instruments through macro hedges as of December 31, 2023 amounted to €(567) million and €(422) million for assets and liabilities, respectively. The impact (before taxes) of macro hedges on Banco Sabadell’s consolidated income statement for the year ended December 31, 2023 amounted to €(290) million and €576 million for hedged instruments and hedged items, respectively. These amounts include adjustments for all macro hedges and such adjustments may not comply with IFRS-IASB.

Given the absence of information in Banco Sabadell’s consolidated financial statements as of and for the year ended December 31, 2023 and Banco Sabadell’s condensed consolidated interim financial statements as of and for the six months ended June 30, 2024 regarding the extent of macro hedging accounting that could potentially fail to comply with IFRS-IASB, BBVA is not able to calculate the adjustments that would need to be applied to the consolidated financial information of Banco Sabadell as of any date or for any period in order to make such information compliant with IFRS-IASB (“harmonization adjustments”). Accordingly, BBVA has not made any harmonization adjustments to the consolidated financial information of Banco Sabadell as of any date or for any period to make such information compliant with IFRS-IASB.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements included in this offer to exchange/prospectus are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. BBVA also may make forward-looking statements in BBVA’s other documents filed with, or furnished to, the SEC that are incorporated by reference into this offer to exchange/prospectus. Forward-looking statements can be identified by the use of forward-looking terminology such as “believe”, “expect”, “estimate”, “forecast”, “project”, “anticipate”, “should”, “intend”, “probability”, “risk”, “VaR”, “target”, “goal”, “objective” and “future” or by the use of similar expressions or variations on such expressions, or by the discussion of strategy or objectives. Forward-looking statements are based on current plans, estimates and projections, are not guarantees of future performance and are subject to inherent risks, uncertainties and other factors that could cause actual results to differ materially from the future results expressed or implied by such forward-looking statements.

In particular, this offer to exchange/prospectus and certain documents incorporated by reference into this offer to exchange/prospectus include forward-looking statements or guidance regarding or relating but not limited to BBVA’s future financial position, plans and objectives management for future operations, results of operations, synergies, impairment loss, provisions, capital, leverage and other regulatory ratios, capital distributions, management objectives and/or strategic initiatives, commitments and targets (including, without limitation, environmental, social and governance commitments and targets), the outcome of legal and regulatory actions and proceedings and risk management, including BBVA’s potential exposure to various types of risk such as market risk, interest rate risk, currency risk and equity risk, and other statements that are not historical facts. For example, certain of the market risk disclosures are dependent on choices about key model characteristics, assumptions and estimates, and are subject to various limitations. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future.

BBVA has identified some of the risks inherent in forward-looking statements in “Item 3. Key Information—Risk Factors”, “Item 4. Information on the Company”, “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk” of its 2023 Form 20-F. Other factors could also adversely affect BBVA’s results or the accuracy of forward-looking statements in this offer to exchange/prospectus and the documents incorporated by reference into this offer to exchange/prospectus, and you should not consider the factors discussed here or in such other documents (including the sections of BBVA’s 2023 Form 20-F listed above) to be a complete set of all potential risks or uncertainties. Important factors that could cause actual results to differ materially from those expressed or implied by forward-looking statements include, among others:

•

the deterioration of economic conditions or the alteration of the institutional environment of the countries in which BBVA operates, especially Spain, Mexico and Turkey, including any adverse developments, or the perception that such developments may occur, regarding credit quality, public debt sustainability, economic or fiscal policy and sovereign ratings, particularly Spain’s, among other factors;

•

the intensity of geopolitical and economic risks in recent years as a result of, among other factors, the tensions triggered by the armed conflict in the Middle East, the war between Ukraine and Russia, long-standing United States–China trade tensions, Brexit and the rise of populism in several regions of the world. Furthermore, there is the risk of a sharp growth slowdown in China, which could lead to an adverse GDP impact in many geographies;

•

changes or volatility in interest rates, foreign exchange rates, asset prices, equity markets, commodity prices (including energy prices), inflation or deflation and, in particular, as of the date of this offer to exchange/prospectus, the depreciation of the currencies of the non-euro geographical areas in which BBVA operates, high inflation, stagflation due to more intense or prolonged supply crises, high interest rates in most of the geographical areas where BBVA operates (which may impact default rates) and low real interest rates in Turkey (which may affect BBVA’s margins);

•

the increased turbulence in the banking sector since March 2023, in particular, following the liquidity and other problems experienced by certain banks in the United States and Switzerland, which have led to increased concerns over the volatility and quality of banks’ deposits and their exposure to rising interest rates, and have adversely affected the valuations of certain banks. BBVA has significant exposure to the global banking sector. In addition, certain actions by Swiss regulators in 2023 have led to increased uncertainty regarding the potential actions to be adopted by the relevant authorities in connection with a bank’s failure. Moreover, regulatory changes are expected in the EU and, particularly, in Spain, in connection with the ranking of claims upon a bank’s insolvency, providing a preference to claims of all depositors relative to ordinary unsecured claims, which may adversely affect the risk profile and cost of banks’ debt securities. Further, there could be changes to the deposit guarantee schemes in certain jurisdictions, which could lead to changes in customer behavior and how banks manage their deposits portfolio;

•

adverse developments in emerging economies, in particular Latin America and Turkey, including unfavorable political and economic developments, social instability and changes in governmental policies, including expropriation, nationalization, exchange controls or other limitations on the distribution or repatriation of dividends, international ownership legislation, tax policies, interest rate caps, fee caps and other policies affecting the banking sector, including the “liraization” strategy in Turkey (which seeks to increase the weight of Turkish lira-denominated assets and liabilities of the banking system);

•

in Spain, political, regulatory and economic uncertainties have increased since the July 2023 general elections and the elections in Catalonia in May 2024 and there is a risk that policies could be adopted that have an adverse impact on the economy or BBVA’s business;

•

downgrades in BBVA’s credit ratings or in sovereign credit ratings, particularly Spain’s credit ratings;

•

the monetary, interest rate and other policies of central banks, and the trade, economic and other policies of governments, in the EU, Spain, Mexico, Turkey, the United States and elsewhere, including the impact of still-prevailing high interest rates on the BBVA Group’s results of operations (including mark-to-market losses on securities portfolios, reduced demand for credit, increased funding costs and higher default rates) and the impact of any future interest-rate reductions on inflation;

•

adjustments in the real estate markets in the geographical areas in which BBVA operates, in particular in Spain, Mexico and Turkey;

•

the success of BBVA’s acquisitions and investments, divestitures, mergers, joint ventures and strategic alliances;

•

BBVA’s ability to complete the exchange offer and integrate Banco Sabadell successfully and unanticipated losses in connection therewith;

•

the effects of competition in the markets in which BBVA operates, which may be influenced by regulation or deregulation affecting BBVA or its competitors, and BBVA’s ability to implement technological advances;

•

BBVA’s ability to comply with various legal and regulatory regimes and the impact of applicable laws and regulations on BBVA’s operations, including capital, resolution, liquidity, provision and consumer protection requirements, and the increasing tax burden;

•

changes in consumer spending and savings habits, including changes in government policies which may influence spending, saving and investment decisions;

•

BBVA’s ability to continue to access sources of liquidity and funding, including public sources of liquidity such as the funding provided by the ECB under its programs, and BBVA’s ability to receive dividends and other funds from BBVA’s subsidiaries;

•

BBVA’s ability to hedge certain risks economically;

•

BBVA’s ability to address physical, regulatory, reputational, transition and business risks associated with climate change and emerging and developing environmental, social and governance (“ESG”) standards, including BBVA’s ability to meet any ESG expectations, targets or obligations and the cost thereof;

•

BBVA’s ability to make payments on certain substantial unfunded amounts relating to commitments with personnel;

•

the performance of BBVA’s international operations and BBVA’s ability to manage such operations;

•

weaknesses or failures in the BBVA Group’s internal or outsourced processes, systems (including information technology systems) and security;

•

weaknesses or failures of BBVA’s anti-money laundering or anti-terrorism programs, or of BBVA’s internal policies, procedures, systems and other mitigating measures designed to ensure compliance with applicable anti-corruption laws and sanctions regulations;

•

security breaches, including cyber-attacks and identity theft;

•

the outcome of legal and regulatory actions and proceedings, both those to which the BBVA Group is currently exposed and any others which may arise in the future, including actions and proceedings related to former subsidiaries of the BBVA Group or in respect of which the BBVA Group may have indemnification obligations;

•

actions that are incompatible with BBVA’s ethics and compliance standards, and BBVA’s failure to timely detect or remedy any such actions;

•

uncertainty surrounding the integrity and continued existence of reference rates and the transition away from the Euro Interbank Offered Rate (EURIBOR), Euro OverNight Index Average (EONIA) and London Inter-bank Offered Rate (LIBOR) to new reference rates;

•

BBVA’s success in managing the risks involved in the foregoing, which depends, among other things, on the adequacy of BBVA’s internal risk models and BBVA’s ability to anticipate events that are not captured or fully accounted for in the models BBVA uses; and

•

force majeure and other events beyond BBVA’s control.

In addition to the above, BBVA has identified certain risks that are specific to the exchange offer, that could also cause actual results to differ materially from those expressed or implied by forward-looking statements. See “Risk Factors—Risks Relating to the Exchange Offer”. Furthermore, this offer to exchange/prospectus includes certain forward-looking statements of Banco Sabadell’s management, including under “Information about Banco Sabadell”. Such statements reflect only the views of Banco Sabadell’s management, have not been updated or verified by BBVA and are subject to similar risks and uncertainties as the other forward-looking statements included herein, mutatis mutandis, many of which could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

Readers are cautioned not to place undue reliance on forward-looking statements. In addition, the forward-looking statements made in this offer to exchange/prospectus (or any particular document) speak only as of the date of this offer to exchange/prospectus (or any such particular document). BBVA does not intend to publicly update or revise these forward-looking statements to reflect events or circumstances after the date thereof, including, without limitation, changes in BBVA’s business, strategy, targets or expectations, including as a result of the occurrence of unanticipated events, and BBVA does not assume any responsibility to do so. You should, however, consult any further disclosures of a forward-looking nature BBVA may make in BBVA’s other documents filed with, or furnished to, the SEC that are incorporated by reference into this offer to exchange/prospectus.

The safe harbors for forward-looking statements under Section 27A of the Securities Act and Section 21E of the Exchange Act, added by the Private Securities Litigation Reform Act of 1995, do not apply to forward-looking statements made in connection with a tender offer.

SUMMARY

This summary highlights selected information from this offer to exchange/prospectus. It does not contain all the information that is important to you. Before you decide whether or not to tender your Banco Sabadell shares, you should read carefully this entire offer to exchange/prospectus as well as the documents that are incorporated by reference into or filed as exhibits to the Registration Statement of which this offer to exchange/prospectus forms a part. See “Where You Can Find More Information” and “Incorporation of Certain Information by Reference” in this offer to exchange/prospectus beginning on page 12 and page 13, respectively.

BBVA Group

The BBVA Group is a customer-centric global financial services group founded in 1857. Internationally diversified and with strengths in retail banking, asset management and wholesale banking, the BBVA Group is committed to offering a compelling digital proposition focused on customer experience. BBVA has a leadership position in the Spanish market, it is the largest financial institution in Mexico in terms of assets, it has leading franchises in South America, and it is the majority shareholder in Garanti BBVA, Turkey’s largest bank in terms of market capitalization. The BBVA Group had consolidated assets of €759,534 million and €775,558 million as of June 30, 2024 and December 31, 2023, respectively, and net attributable profit/(loss) of €4,994 million and €8,019 million for the six months ended June 30, 2024 and the year ended December 31, 2023, respectively.

Additional information about the BBVA Group is included in BBVA’s 2023 Form 20-F and BBVA First Half 2024 Results Form 6-K, which are incorporated by reference in this offer to exchange/prospectus.

BBVA’s principal executive offices are located at Calle Azul, 4, 28050 Madrid, Spain, and its telephone number at that location is (+34) 91-537-7000.

Banco Sabadell

Banco Sabadell and its consolidated subsidiaries compose the Banco Sabadell Group. Banco Sabadell was incorporated on December 31, 1881 in the town of Sabadell, near Barcelona for an unlimited term and conducts its business under the commercial name “Banco Sabadell”.

Banco Sabadell has its registered office in the city of Alicante, at Avenida Óscar Esplá nº 37, PC 03007, Spain (contact telephone number 0034 902 030 255) and is registered with the Commercial Registry of Alicante (Spain) under volume 4,070, book 1 and sheet A-156980.

Banco Sabadell is a Spanish company with legal status as a public limited company (sociedad anónima) and is governed by the Spanish Corporation Law. Banco Sabadell is subject to special legislation applicable to credit entities in general, the supervision, control and regulation of the ECB, and, as a listed company, the regulatory oversight of the CNMV.

The main activity carried out by the Banco Sabadell Group in the different jurisdictions in which it operates is banking, and fundamentally commercial banking through a wide range of products and services for large and medium-sized companies, small and medium-sized enterprises (“SMEs”), retailers and self-employed workers, professional groups, other individuals and bancassurance. The main customers of the Banco Sabadell Group are SMEs and individual clients in Spain, with a total customer base that is now six times larger than it was in 2008. As of December 31, 2023, the Banco Sabadell Group operated a total of 1,420 branches (1,178 in Spain). The Banco Sabadell Group’s retail banking activities are conducted primarily through this branch network.

Risk Factors (page 34)

An investment in BBVA shares involves risks. In considering whether or not to tender your Banco Sabadell shares in the exchange offer, you should carefully consider the information about these risks set forth under “Risk Factors” in this offer to exchange/prospectus beginning on page 34, together with the other information included or incorporated by reference into this offer to exchange/prospectus.

The Exchange Offer (page 104)

Exchange Offer

BBVA is undertaking the exchange offer pursuant to the offering documents published (or that will be published) in Spain and made available (or that will be made available) to all shareholders of Banco Sabadell, to acquire all of the issued and outstanding Banco Sabadell shares. The exchange offer will be addressed to U.S. holders of Banco Sabadell shares pursuant to this offer to exchange/prospectus.

Consideration

If the exchange offer is completed, you will receive one newly-issued BBVA share and €0.29 in cash for each 5.0196 Banco Sabadell shares (adjusted, as the case may be, as described in this offer to exchange/prospectus) you tender into, and do not withdraw from, the exchange offer.

Fractional BBVA Shares

Exchange Offer Cash Consideration

Holders of Banco Sabadell shares will receive, in addition to the BBVA shares they are entitled to receive, €0.29 in cash for each 5.0196 Banco Sabadell shares tendered and not withdrawn. Tendering holders of Banco Sabadell shares that tender a number of Banco Sabadell shares that does not entitle them to receive at least one newly-issued BBVA share, or that entitles them to receive a whole number of newly-issued BBVA shares but have an excess number of Banco Sabadell shares that would entitle them to receive the above cash payment in lieu of a fractional BBVA share, will receive an amount in cash equal to €0.29 multiplied by the fraction of a BBVA share (rounded to the nearest hundredth with five one thousandths of a BBVA share being rounded upwards (e.g., 0.205 would be rounded to 0.21)) that they would otherwise be entitled to receive in

accordance with the exchange ratio of 5.0196 (adjusted, as the case may be, as described in this offer to exchange/prospectus). Such amount in cash will be rounded to the nearest euro cent and, in the event of a half of a euro cent, to the immediately higher euro cent. Under no circumstances will interest be paid on the exchange offer cash consideration.

Expiration Date

You may tender your Banco Sabadell shares into the exchange offer at any time prior to the expiration time, which is 17:59:59 p.m. Eastern time (23:59:59 p.m. Central European time) on the expiration date (which is currently , 2024). The exchange offer period may be extended as described below.

Extensions

BBVA may extend the period of time in which the exchange offer is open one or more times in accordance with the provisions of article 23 of the Spanish Takeover Regulation, provided that such extension complies with U.S. securities laws, and, provided further that the acceptance period does not exceed 70 calendar days and that any extension is communicated in advance to the CNMV. The extension of the acceptance period, if any, must be announced at least three calendar days before the then-scheduled expiration date of the acceptance period, indicating the circumstances that motivate such extension. The CNMV may also extend the exchange offer acceptance period at its own discretion under the circumstances set forth in the Spanish Takeover Regulation, including (i) following a supplement to the offering documents published (or that will be published) in Spain when the CNMV considers that the materiality of the information disclosed in such supplement makes the extension of the exchange offer appropriate; or (ii) in other cases where the CNMV deems such extension necessary, through a justified resolution and to the extent legally possible.

Conditions to Completion of the Exchange Offer

Completion of the exchange offer is subject to the conditions set forth in “The Exchange Offer—Conditions to Completion of the Exchange Offer” in this offer to exchange/prospectus beginning on page 107.

Procedure for Tendering

Holders of Banco Sabadell shares who wish to tender their Banco Sabadell shares into the exchange offer must submit their declaration of acceptance in writing to the Iberclear participant where their Banco Sabadell shares are deposited, either in person, by electronic means or by any other means permitted by such Iberclear participant.

Withdrawal

For more information on the procedure for tendering, the timing of the exchange offer, extensions of the exchange offer and your rights to withdraw your Banco Sabadell shares from the exchange offer prior to the expiration time, see “The Exchange Offer” in this offer to exchange/prospectus beginning on page 104.

BBVA’s Reasons for the Proposed Exchange Offer (page 101)

In unanimously approving the exchange offer, BBVA’s board of directors considered a variety of factors in favor of the proposed exchange offer.

•

the combination of very complementary businesses, both in terms of geographical diversification and in terms of the positioning in different client segments in Spain; and

•

a combined group with ample solvency (CET1 above 12%) and a higher resilience to external shocks and a lower vulnerability through economic cycles due to increased diversification.

Additionally, BBVA believes that the intended merger, if completed, will have a positive impact on the clients and employees of both entities and society as a whole.

While it is BBVA’s intention to effect a merger by absorption, BBVA is not obligated to consummate such a merger following completion of the exchange offer or to consummate it on the same terms as the exchange offer. Further, BBVA may be unable to complete the merger. See “The Exchange Offer—Certain Consequences of the Exchange Offer—Squeeze-out and Merger”. For further information regarding BBVA’s plans with respect to Banco Sabadell if the intended merger is not consummated for any reason, please see “The Exchange Offer—Plans for Banco Sabadell after the Exchange Offer—Planned Corporate Restructuring Transactions of Any Kind”.

See “BBVA’s Reasons for the Proposed Exchange Offer” in this offer to exchange/prospectus beginning on page 101.

BBVA’s Interest in Banco Sabadell (page 130)

Neither BBVA, nor the directors of BBVA nor any of the companies within the BBVA Group, nor, to the best of BBVA’s knowledge and belief, any of the directors of the companies in the BBVA Group, currently holds any Banco Sabadell shares, nor any securities that may grant subscription or acquisition rights to Banco Sabadell shares, whose voting rights would be attributable to BBVA pursuant to article 5 of the Spanish Takeover Regulation.

Shareholding of BBVA’s Directors, Executive Officers and Their Affiliates (page 131)

As of October 11, 2024, the shareholding of BBVA’s directors, executive officers and their affiliates represented approximately 0.15% of the outstanding BBVA shares. BBVA’s board of directors proposed that the

shareholders of BBVA pass the relevant capital increase resolution necessary to issue the shares of BBVA to be issued in connection with the exchange offer. Such capital increase resolution was approved at an extraordinary general shareholders’ meeting on July 5, 2024, with shareholders representing 70.75% of the outstanding BBVA shares present at such meeting and 96.01% of such shareholders voting in favor.

Appraisal Rights (page 127)

The holders of Banco Sabadell shares are not entitled under Spanish law or otherwise to appraisal rights with respect to the exchange offer. For more information about appraisal rights of holders of Banco Sabadell shares, see “The Exchange Offer—Appraisal Rights” in this offer to exchange/prospectus beginning on page 127.

Prior Non-Opposition of the ECB (page 106)

Pursuant to the provisions of Law 10/2014, of June 26, 2014, on the regulation, supervision and solvency of credit institutions, and Royal Decree 84/2015, of February 13, 2015 implementing Law 10/2014, of June 26, 2014, on the regulation, supervision and solvency of credit institutions, the acquisition by BBVA of control of Banco Sabadell resulting from the exchange offer was subject to the duty of prior notification to the Bank of Spain and to the obtainment of the non-opposition by the ECB. The ECB’s non-opposition was obtained on September 5, 2024.

Conditions to Completion of the Exchange Offer (page 107)

Completion of the exchange offer is subject to the following conditions:

ii.

iii.

iv.

In accordance with the provisions of article 13.2.d) of the Spanish Takeover Regulation, the authorization of the indirect acquisition of control of Banco Sabadell’s banking subsidiary in the United Kingdom, TSB, by the PRA. This condition was satisfied on September 2, 2024.

the condition referred to in (iii) above or withdraw the exchange offer if before the end of the acceptance period the Spanish antitrust authorities (i) approve the economic concentration resulting from the exchange offer subject to the fulfillment of any condition (in which case, BBVA will evaluate the expected consequences of such condition to determine whether to waive the condition and continue with completion of or withdraw the exchange offer) or (ii) have not given their express (whether conditional or unconditional) or tacit authorization of the economic concentration resulting from the exchange offer. For additional information on condition (iii) above, see “The Exchange Offer—Antitrust Authorizations”.

Antitrust Authorizations (page 107)

The economic concentration resulting from completion of the exchange offer is subject to the authorization of the following antitrust authorities:

The Spanish antitrust authorities, in accordance with Law 15/2007, of July 3, on the defense of competition.

In accordance with the provisions of article 26.1 of the Spanish Takeover Regulation, the economic concentration resulting from the exchange offer is subject to the express or tacit authorization for the Spanish antitrust authorities with the following effects:

•

If before the end of the acceptance period the Spanish antitrust authorities do not object to completion of the exchange offer, this condition will be fully fulfilled.

•

If before the end of the acceptance period the Spanish antitrust authorities declare the proposed exchange offer inappropriate, BBVA must withdraw the exchange offer.

•

If before the end of the acceptance period the Spanish antitrust authorities subject their authorization to the fulfillment of any condition, BBVA may, but is not required to, withdraw the exchange offer.

•

If before the end of the acceptance period the Spanish antitrust authorities have not given their express or tacit authorization to the exchange offer, BBVA may, but is not required to, withdraw the exchange offer.

ii.

The Mexican antitrust authorities, in accordance with the Mexican Competition Law.

iii.

The U.S. antitrust authorities, in accordance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The 30-day waiting period provided for under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 expired on July 3, 2024 and, as a result, the economic concentration resulting from completion of the exchange offer is considered to be approved by the U.S. antitrust authorities.

iv.

The French antitrust authorities, in accordance with the provisions of the French Commercial Code. The French antitrust authorities authorized the economic concentration resulting from completion of the exchange offer on July 9, 2024.

The Portuguese antitrust authorities, in accordance with article 37 of Law 19/2012, of May 8. The Portuguese antitrust authorities authorized the economic concentration resulting from completion of the exchange offer on July 10, 2024.

vi.

The Moroccan antitrust authorities, in accordance with article 11.3 of Law 104-12, on free pricing and competition. The Moroccan antitrust authorities authorized the economic concentration resulting from completion of the exchange offer on July 24, 2024.

As of the date of this offer to exchange/prospectus, BBVA has requested the corresponding authorizations from the aforementioned competent antitrust authorities.

In addition, on May 28, 2024 the exchange offer was notified on a voluntary basis to the Competition and Markets Authority (the “CMA”), the UK’s antitrust authority. On June 7, 2024 the CMA confirmed that it had no further questions regarding the exchange offer.

The relevant authorizations from the competent antitrust authorities set forth in items (iii) to (vi) above were obtained on the respective dates indicated therein, and completion of the exchange offer is not conditioned upon obtaining the relevant authorization from the Mexican antitrust authority set forth in item (ii) above. As a result, the exchange offer will be completed even if the Mexican antitrust authority does not authorize the economic concentration resulting from completion of the exchange offer or authorizes the economic concentration resulting from completion of the exchange offer subject to conditions (including a requirement to subsequently dispose of a material portion of the assets of Banco Sabadell’s banking affiliate in Mexico, which BBVA considers not to be material in the context of the exchange offer) or any such authorization has not been received by the expiration date.

However, as set forth under “The Exchange Offer—Conditions to Completion of the Exchange Offer”, completion of the exchange offer is conditioned upon obtaining the authorization from the Spanish antitrust authorities set forth in item (i) above. According to the Spanish Takeover Regulation, if the Spanish antitrust authorities declare the proposed exchange offer inappropriate before the end of the acceptance period, BBVA will be required to withdraw the exchange offer. In addition, pursuant to the Spanish Takeover Regulation, BBVA may, at its discretion, waive the condition referred to in (i) above or withdraw the exchange offer if before the end of the acceptance period the Spanish antitrust authorities (i) approve the economic concentration resulting from the exchange offer subject to the fulfillment of any condition (in which case, BBVA will evaluate the expected consequences of such condition to determine whether to waive the condition and continue with completion of or withdraw the exchange offer) or (ii) have not given their express (whether conditional or unconditional) or tacit authorization of the economic concentration resulting from the exchange offer.

As noted above, if by the end of the acceptance period the Spanish antitrust authorities have not given their express (whether conditional or unconditional) or tacit authorization of the economic concentration resulting from the exchange offer and all of the other conditions are satisfied or waived, BBVA may waive the condition and proceed with completion of the exchange offer or withdraw the exchange offer. In such a case, the Spanish antitrust authorities’ decision with respect to the economic concentration resulting from the exchange offer would be obtained after the end of the acceptance period. If BBVA decides to proceed with completion of the exchange offer without having received the Spanish antitrust authorities’ decision with respect to the economic concentration resulting from the exchange offer, BBVA would not be able to exercise the political rights attached to the shares of Banco Sabadell owned by BBVA until the Spanish antitrust authorities issue a decision. Once a decision is issued, BBVA will have to abide by such decision. If the Spanish antitrust authorities decide not to authorize the economic concentration resulting from the exchange offer, BBVA would be required to sell all or part of its stake in Banco Sabadell, on the terms set forth in the resolution of the Spanish antitrust authorities. If the Spanish antitrust authorities approve the economic concentration resulting from the exchange offer subject to the fulfillment of any condition, BBVA would be required, at its election, either (i) to fulfill the related conditions or (ii) to sell all or part of its stake in Banco Sabadell, on the terms set forth in the resolution of the Spanish antitrust authorities. The percentage of Banco Sabadell shares over which BBVA may not be able to exercise their respective political rights or that BBVA may be required to sell, and the timing for compliance, with any such requirement would be determined by the Spanish antitrust authorities.

Governmental and Regulatory Authorizations (page 109)

According to the information available to BBVA, Banco Sabadell has control or significant shareholdings in regulated entities both in Spain and in other jurisdictions. The acquisition by BBVA of control of Banco Sabadell as a result of the exchange offer will involve the indirect acquisition of control or significant shareholdings in

such regulated subsidiaries or affiliates of Banco Sabadell, which may require, in accordance with the applicable legislation in each case, obtaining the authorization or non-opposition of the competent regulatory supervisory bodies in Spain or in jurisdictions other than Spain, as applicable. As a result, according to the information available to BBVA, the authorization or non-opposition with respect to the indirect acquisition of control or significant shareholdings in regulated subsidiaries or affiliates of Banco Sabadell is subject to the prior notification to or the authorization or non-opposition of the following competent regulatory supervisory bodies:

The PRA in relation to the acquisition of indirect control of TSB, English banking subsidiary of Banco Sabadell, in accordance with the Financial Services and Markets Act 2000. This authorization was obtained on September 2, 2024.

ii.

The ECB in relation to the acquisition of indirect control of Sabadell Consumer Finance, S.A.U., Spanish banking subsidiary of Banco Sabadell, in accordance with Law 10/2014 of June 26, on the regulation, supervision and solvency of credit institutions and Royal Decree 84/2015 of February 13, which develops Law 10/2014 of June 26, on the regulation, supervision and solvency of credit institutions. The ECB’s non-opposition was obtained on September 5, 2024.

iii.

The ECB in relation to the acquisition of indirect control of, or the acquisition of significant shareholdings in, the following subsidiaries and affiliates of Banco Sabadell: TSB (United Kingdom), Banco Sabadell, S.A., Institución de Banca Múltiple (Mexico), Sabcapital, S.A. de C.V., SOFOM, E.R. (Mexico), Banco Atlántico (Bahamas) Bank & Trust Ltd. (in liquidation) (Bahamas) and Financiera Iberoamericana, S.A. (Cuba), in accordance with Law 10/2014 of June 26, on the regulation, supervision and solvency of credit institutions and Royal Decree 84/2015 of February 13, which develops Law 10/2014 of June 26, on the regulation, supervision and solvency of credit institutions. The ECB’s non-opposition was obtained on September 5, 2024.

iv.

The Bank of Spain in relation to the acquisition of indirect control of Paycomet, S.L., Spanish payment institution subsidiary of Banco Sabadell, in accordance with Royal Decree-Law 19/2018, of November 23, on payment services and other financial urgent measures, Law 10/2014 of June 26, on the regulation, supervision and solvency of credit institutions and Royal Decree 84/2015 of February 13, which develops Law 10/2014 of June 26, on the regulation, supervision and solvency of credit institutions. On July 23, 2024, the Bank of Spain confirmed its non-opposition to the acquisition of indirect control of Paycomet, S.L. by BBVA.

The CNMV in relation to the acquisition of indirect control of Urquijo Gestión, S.A.U. S.G.I.I.C, Spanish management company of collective investment institutions subsidiary of Banco Sabadell, in accordance with Law 35/2003, of November 4, on collective investment institutions. On September 26, 2024, the CNMV confirmed its non-opposition to the acquisition of indirect control of Urquijo Gestión, S.A.U. S.G.I.I.C by BBVA.

vi.

The Directorate-General of Insurance and Pension Funds in relation to the indirect acquisition of a significant shareholding in each of Bansabadell Seguros Generales, S.A. de Seguros y Reaseguros and Bansabadell Vida, S.A. de Seguros y Reaseguros, Spanish insurance companies in which Banco Sabadell has a significant shareholding, in accordance with Law 20/2015, of July 14, on organization, supervision and solvency of the insurance and reinsurance undertakings. On October 7, 2024, the Directorate-General of Insurance and Pension Funds confirmed its non-opposition to the indirect acquisition of a significant shareholding in each of Bansabadell Seguros Generales, S.A. de Seguros y Reaseguros and Bansabadell Vida, S.A. de Seguros y Reaseguros by BBVA.

vii.

Insurance and Pension Funds informing about the indirect acquisition of a significant stake in Bansabadell Pensiones E.F.G.P, S.A. and no express or tacit authorization from the Directorate-General for Insurance and Pension Funds is required thereafter.

viii.

The Directorate-General of Insurance and Pension Funds in relation to the indirect acquisition of control of Bansabadell Mediación, Operador de Banca-Seguros vinculado del Grupo Banco Sabadell, S.A., Spanish bank-assurance operator subsidiary of Banco Sabadell, in accordance with Royal Decree-law 3/2020, of February 4, on urgent measures by which various directives of the European Union in the field of public procurement in certain sectors are incorporated into the Spanish legal system; private insurance; pension plans and funds; in the tax field and tax litigation. On October 4, 2024, the Directorate-General of Insurance and Pension Funds confirmed its non-opposition to the indirect acquisition of control of Bansabadell Mediación, Operador de Banca-Seguros vinculado del Grupo Banco Sabadell, S.A. by BBVA.

ix.

The Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores) in relation to the acquisition of indirect control of Banco Sabadell S.A., Institución de Banca Múltiple, Mexican multiple banking institution subsidiary of Banco Sabadell, in accordance with the Mexican Securities Market Law published in the Official Gazette on December 30, 2005, as amended, and applicable legislation.

The Central Bank of Morocco (Bank Al Maghrib) in relation to the indirect change of control of Banco Sabadell’s branch in Casablanca (Morocco).

xi.

The U.S. Financial Industry Regulatory Authority (“FINRA”) in relation to the acquisition of indirect control of Sabadell Securities USA, Inc., U.S. broker-dealer subsidiary of Banco Sabadell.

xii.

The Florida Division of Securities in relation to the acquisition of indirect control of Sabadell Securities USA, Inc., U.S. broker-dealer subsidiary of Banco Sabadell.

The relevant authorization or non-opposition from the competent regulatory supervisory bodies set forth in items (i) to (viii) above were obtained on the respective dates indicated therein, and completion of the exchange offer is not conditioned upon obtaining the relevant authorization or non-opposition from the competent regulatory supervisory bodies set forth in items (ix) to (xii) above. As a result, the exchange offer will be completed even if any of the regulatory supervisory bodies in items (ix) to (xii) above does not authorize the exchange or authorizes the exchange offer subject to conditions or any such authorization has not been received by the expiration date.

The exchange offer has also been notified to the European Commission pursuant to Regulation (EU) 2022/2560 of the European Parliament and of the Council of December 14, 2022, on foreign subsidies that distort the internal market. Completion of the exchange offer is not conditioned upon obtaining such authorization.

Certain Consequences of the Exchange Offer (page 127)

The acquisition of Banco Sabadell shares by BBVA pursuant to the exchange offer will reduce the number of holders of Banco Sabadell shares and the number of Banco Sabadell shares that might otherwise trade publicly and, depending on the number of Banco Sabadell shares acquired by BBVA pursuant to the exchange offer, could adversely affect the liquidity and market value of any remaining Banco Sabadell shares held by the public or result in their automatic delisting from the Spanish Stock Exchanges if BBVA obtains the percentage of voting rights required to exercise its squeeze-out right.

If the requirements set forth in articles 116 of the Securities Market Law and 47 of the Spanish Takeover Regulation are met, which would require that (i) the exchange offer is accepted by holders of Banco Sabadell shares representing at least 90% of the Banco Sabadell shares subject to the exchange offer; and (ii) following completion

of the exchange offer, BBVA holds a number of Banco Sabadell shares representing at least 90% of the voting rights in Banco Sabadell’s share capital, BBVA will exercise its right to demand the squeeze-out of the remaining Banco Sabadell shares at the same consideration as offered pursuant to the exchange offer (adjusted, as the case may be, as described in this offer to exchange/prospectus). To this effect, within the three Spanish stock exchange business days following the publication of the results of the exchange offer on the website of the CNMV, BBVA will communicate to the CNMV and publicly announce whether or not the requirements to execute a squeeze-out transaction have been met. In that announcement, or within the two following Spanish stock exchange business days, BBVA will announce the date of the squeeze-out transaction. In accordance with article 48.4 of the Spanish Takeover Regulation, such date will be fixed between the 15^th and the 20^th Spanish business day following the date of such announcement. Such decision will be irrevocable. Upon settlement of such squeeze-out transaction, the Banco Sabadell shares will be automatically delisted from the Spanish Stock Exchanges.

Notwithstanding the above, if the exchange offer is completed, regardless of the percentage of Banco Sabadell shares acquired by BBVA pursuant to the exchange offer, BBVA intends to promote, as soon as possible after the settlement of the exchange offer, and irrespective of whether the thresholds provided for in articles 116 of the Spanish Securities Market Law and 47 of the Spanish Takeover Regulation for the exercise of the right of squeeze-out are met, a merger by absorption of Banco Sabadell by BBVA, with an exchange ratio equivalent, as far as possible, to the consideration offered in the exchange offer, subject to market conditions or other circumstances making it inadvisable to carry out such merger process or carry out such merger process on such terms. The exchange ratio of any such merger must be validated, on the basis of the fair value of the equity of the entities participating in the merger, by an independent expert appointed for such purpose by the relevant commercial registry, in accordance with applicable Spanish law, and may ultimately differ from the consideration offered in the exchange offer. A joint merger plan would need to be formulated by BBVA’s and Banco Sabadell’s respective boards of directors and approved by BBVA’s and Banco Sabadell’s respective shareholders, and its consummation would require the prior authorization of the Ministry of Economy, Trade and Business in accordance with the provisions of the twelfth additional provision of Law 10/2014, of June 26, on the regulation, supervision and solvency of credit institutions and related regulations. If the intended merger is not consummated for any reason, BBVA will not pursue a delisting offer over the Banco Sabadell shares for at least 12 months following the settlement of the exchange offer.

While it is BBVA’s intention to effect a merger by absorption, BBVA is not obligated to consummate such a merger following completion of the exchange offer or to consummate it on the same terms as the exchange offer. As noted above, BBVA’s intention is to apply in any such merger an exchange ratio equivalent, as far as possible, to the consideration offered in the exchange offer. However, the exchange ratio applicable in any such merger must be validated by an independent expert and may ultimately differ from the consideration offered in the exchange offer. Further, any such merger would need BBVA’s and Banco Sabadell’s respective boards of directors to formulate a joint merger plan, which would need to be approved by BBVA’s and Banco Sabadell’s respective shareholders. The consummation of the merger would require the prior authorization of the Spanish Economy, Trade and Business Minister, following the issuance of related reports by certain regulators and authorities that will have previously issued favorable opinions with respect to the exchange offer. If any of the foregoing corporate approvals or the authorization from the Economy, Trade and Business Minister is not obtained, the merger will not be consummated. Following completion of the exchange offer, BBVA will be able to appoint the majority of the members of the board of directors of Banco Sabadell and exercise at least 50.01% of Banco Sabadell’s voting rights. BBVA is not aware of any Spanish precedent transaction where the authorization of a merger following the acquisition of control of a credit institution, as contemplated by this offer to exchange/prospectus has not been granted by the Spanish Economy, Trade and Business Minister. See “The Exchange Offer—Certain Consequences of the Exchange Offer—Squeeze-out and Merger”. For further information regarding BBVA’s plans with respect to Banco Sabadell if the intended merger is not consummated for any reason, please see “The Exchange Offer—Plans for Banco Sabadell after the Exchange Offer—Planned Corporate Restructuring Transactions of Any Kind”.

Source and Amount of Funds (page 130)

The exchange offer is not conditioned upon any financing arrangements, and no funds have been borrowed for purposes of the exchange offer. BBVA will use general corporate funds to pay the exchange offer cash consideration and any additional cash requirements of the exchange offer.

Dividend Payments (page 115)

Spanish Tax Consequences for U.S. Shareholders (page 116)

As a general rule, no charge to Spanish tax (including Spanish Transfer Tax or Value Added Tax) will arise to Qualifying Shareholders (as defined in “The Exchange Offer—Spanish Tax Consequences for U.S. Shareholders” beginning on page 116) in respect of the exchange offer.

The ownership and disposition of BBVA shares by Qualifying Shareholders may entail Spanish tax implications. However, under certain conditions, dividends and capital gains obtained from BBVA shares by Qualifying Shareholders may benefit from the reduced rates and exemptions of the United States-Spain Treaty (as defined in “The Exchange Offer—Spanish Tax Consequences for U.S. Shareholders” beginning on page 116).

U.S. Federal Income Tax Consequences for U.S. Holders (page 120)

The U.S. federal income tax consequences of the exchange offer are discussed under “The Exchange Offer—Tax Consequences—Material U.S. Federal Income Tax Considerations for U.S. Holders”. The discussion of the material U.S. federal income tax consequences contained in this offer to exchange/prospectus is intended to provide only a general discussion and is not a complete analysis or description of all potential U.S. federal income tax consequences that are applicable to you in respect of the exchange offer, nor does it address any tax considerations arising under U.S. state or local or non-U.S. tax laws. You are urged to consult your tax adviser regarding the tax consequences of the exchange offer.

For more information about certain material Spanish and U.S. federal income tax consequences of the exchange offer with respect to the Banco Sabadell shares and of the ownership and disposition of the BBVA shares, see “The Exchange Offer—Material U.S. Federal Income Tax Considerations for U.S. Holders” in this offer to exchange/prospectus beginning on page 120.

Comparison of Rights of Holders of BBVA Shares and Banco Sabadell Shares (page 153)

If you tender into, and do not withdraw, your Banco Sabadell shares from the exchange offer and the exchange offer is completed, you will become a holder of BBVA shares. The rights of a holder of BBVA shares will be governed by BBVA’s bylaws, its general shareholders’ meeting’s regulations and the Spanish Corporation Law. See “Comparison of Rights of Holders of BBVA Shares and Banco Sabadell Shares” in this offer to exchange/prospectus beginning on page 153.

BBVA shares are traded on the Spanish Stock Exchanges, as well as on the LSE and Mexican Stock Exchange. BBVA ADSs are listed on the NYSE under the symbol “BBVA”.

BBVA ADSs (page 116)

If the exchange offer is completed, holders of Banco Sabadell shares who tender their Banco Sabadell shares into, and do not withdraw them from, the exchange offer, will receive BBVA shares. BBVA shares trade in the form of American Depositary Shares (“ADSs”) in the United States on the NYSE. Tendering Banco Sabadell shareholders who receive BBVA shares in the exchange offer may, subject to the provisions of the amended and restated deposit agreement dated June 29, 2007, among BBVA, the Bank of New York Mellon and the holders from time to time of BBVA ADSs, following the exchange offer deposit the BBVA shares they receive in the exchange offer with the depositary for such ADS facility and receive BBVA ADSs that are tradeable on the NYSE.

Unaudited Pro Forma Condensed Financial Information (page 49)

The unaudited pro forma condensed combined financial information (the “pro forma financial information”) included herein gives effect to completion of the exchange offer.

nor is it intended to project the financial position or future results of the combined group. In preparing the pro forma financial information included in this offer to exchange/prospectus BBVA did not have access to non-public information regarding Banco Sabadell. As a result, BBVA prepared the pro forma financial information using solely publicly-available information regarding Banco Sabadell, and financial information of BBVA. The adjustments included in the pro forma financial information solely include those that are factually supportable on the basis of the information that is publicly available to BBVA.

Comparative Market Price and Dividend Per Share Information (page 63)

BBVA shares are listed on the Spanish Stock Exchanges under the symbol “BBVA”. BBVA shares are also listed on the LSE under the symbol “BVA” and the Mexican Stock Exchange under the symbol “BBVA”. BBVA ADSs are listed on the NYSE under the symbol “BBVA”. Each BBVA ADS represents the right to receive one BBVA share. Banco Sabadell shares are listed on the Spanish Stock Exchanges under the symbol “SAB”.

The following table presents trading information for the securities on May 8, 2024, the last trading day before the publication of BBVA’s announcement of its intention to make the exchange offer, as reported on the Spanish Stock Exchanges.


Banco Sabadell Shares			BBVA Shares
High	Low	Close	High	Low	Close
€1.83	€1.79	€1.80	€10.43	€10.23	€10.29

The table below sets forth, for the periods indicated, the high and low closing prices of Banco Sabadell shares and BBVA shares as reported on the Spanish Stock Exchanges, respectively, as well as the any dividend payments made. The share prices included below have not been adjusted for the payment of any dividend payment made after their respective reported date.


	Banco Sabadell Shares						BBVA Shares
	High		Low		Dividends		High		Low		Dividends
First Quarter 2021	€	0.49	€	0.35		N/A	€	4.86	€	3.76		N/A
Second Quarter 2021	€	0.68	€	0.46		N/A	€	5.43	€	4.29		€0.059
Third Quarter 2021	€	0.73	€	0.51		N/A	€	5.91	€	4.91		N/A
Fourth Quarter 2021	€	0.73	€	0.55		N/A	€	6.28	€	4.70		€0.08
First Quarter 2022	€	0.94	€	0.59		N/A	€	6.06	€	4.49		N/A
Second Quarter 2022	€	0.86	€	0.68		€0.03	€	5.32	€	4.15		€0.23
Third Quarter 2022	€	0.79	€	0.60		N/A	€	4.99	€	4.00		N/A
Fourth Quarter 2022	€	0.91	€	0.70		€0.02	€	5.70	€	4.58		€0.12
First Quarter 2023	€	1.33	€	0.91		€0.02	€	7.45	€	5.78		N/A
Second Quarter 2023	€	1.08	€	0.88		N/A	€	7.03	€	6.12		€0.31
Third Quarter 2023	€	1.16	€	1.02		N/A	€	7.71	€	6.83		N/A
Fourth Quarter 2023	€	1.35	€	1.03		€0.03	€	8.70	€	7.39		€0.16
First Quarter 2024	€	1.46	€	1.11		N/A	€	11.04	€	8.00		N/A
Second Quarter 2024	€	1.94	€	1.40		€0.03	€	11.24	€	9.02		€0.39
Third Quarter 2024	€	2.04	€	1.71		N/A	€	10.20	€	8.62		N/A
Fourth Quarter 2024 (through October 11, 2024)	€	1.87	€	1.78	€	0.08	€	9.65	€	9.23	€	0.29

The value of the BBVA shares that will be delivered as consideration in the exchange offer is subject to change as a result of the fluctuation in the market price of the BBVA shares during the pendency of the exchange offer and thereafter, and therefore will likely be different from the prices set forth above at the time of settlement of the exchange offer. See “Risk Factors—Risks Relating to the Exchange Offer—Because the exchange ratio is fixed, the value of the BBVA shares you will receive as a result of the exchange offer is likely to fluctuate”. Holders of Banco Sabadell shares are encouraged to obtain market quotations for the BBVA shares and the Banco Sabadell shares prior to making a decision with respect to the exchange offer.

RISK FACTORS

In addition to the matters described under “Cautionary Statement Regarding Forward-Looking Statements” in this offer to exchange/prospectus beginning on page 17 and the risk factors contained in the 2023 Form 20-F and the BBVA First Half 2024 Results 6-K that are incorporated by reference into this offer to exchange/prospectus, you should carefully consider the following risk factors before deciding whether or not to tender your Banco Sabadell shares into the exchange offer. Each of the matters described in these risk factors could have a material adverse effect on the businesses, financial condition and/or results of operations of BBVA and Banco Sabadell individually or as affiliated companies and on the market price of the BBVA shares and the Banco Sabadell shares.

Risks Relating to the Exchange Offer

Completion of the exchange offer is subject to certain conditions precedent, which may not be satisfied or may only be satisfied subject to conditions.

As described in this offer to exchange/prospectus under “The Exchange Offer—Conditions to Completion of the Exchange Offer”, completion of the exchange offer is subject to the following conditions:

ii.

iii.

iv.

In accordance with the provisions of article 13.2.d) of the Spanish Takeover Regulation, the authorization of the indirect acquisition of control of Banco Sabadell’s banking subsidiary in the United Kingdom, TSB, by PRA. This condition was satisfied on September 2, 2024.

According to the Spanish Takeover Regulation, if the Spanish antitrust authorities declare the proposed exchange offer inappropriate before the end of the acceptance period, BBVA will be required to withdraw the exchange offer. BBVA can provide no assurances that all of the conditions to the exchange offer will be satisfied or that they will be satisfied in the time frame currently expected.

In addition, pursuant to the Spanish Takeover Regulation, BBVA may, at its discretion, waive the condition referred to in (iii) above or withdraw the exchange offer if before the end of the acceptance period the Spanish antitrust authorities (i) approve the economic concentration resulting from the exchange offer subject to the fulfillment of any condition ( in which case, BBVA will evaluate the expected consequences of such condition to determine whether to waive the condition and continue with completion of or withdraw the exchange offer) or (ii) have not given their express (whether conditional or unconditional) or tacit authorization of the economic concentration resulting from the exchange offer. If BBVA decides to proceed with completion of the exchange

offer despite any conditions imposed by the Spanish antitrust authorities, its plans with respect to Banco Sabadell following completion of the exchange offer may change as a result, and BBVA may not be able to fully realize the expected benefits and synergies expected to result from completion of the exchange offer.

Completion of the exchange offer is not conditioned on the obtainment of certain antitrust and regulatory approvals and authorizations; however, if such approvals and authorizations are not obtained, and the exchange offer is completed, the business, financial condition and results of operations of BBVA and Banco Sabadell may be adversely affected.

The economic concentration resulting from completion of the exchange offer is subject to the authorization of the following antitrust authorities:

The Spanish antitrust authorities, in accordance with Law 15/2007, of July 3, on the defense of competition.

•

If before the end of the acceptance period the Spanish antitrust authorities do not object to completion of the exchange offer, this condition will be fully fulfilled.

•

If before the end of the acceptance period the Spanish antitrust authorities declare the proposed exchange offer inappropriate, BBVA must withdraw the exchange offer.

•

ii.

The Mexican antitrust authorities, in accordance with the Mexican Competition Law.

iii.

The U.S. antitrust authorities, in accordance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The 30-day waiting period provided for under the Hart-Scott-Rodino Antitrust Improvements

Act of 1976 expired on July 3, 2024 and, as a result, the economic concentration resulting from completion of the exchange offer is considered to be approved by the U.S. antitrust authorities.

iv.

vi.

As of the date of this offer to exchange/prospectus, BBVA has requested the corresponding authorizations from the aforementioned competent antitrust authorities.

In addition, on May 28, 2024 the exchange offer was notified on a voluntary basis to the CMA, the UK’s antitrust authority. On June 7, 2024 the CMA confirmed that it had no further questions regarding the exchange offer.

Additionally, according to the information available to BBVA, Banco Sabadell has control or significant shareholdings in regulated entities both in Spain and in other jurisdictions. The acquisition by BBVA of control of Banco Sabadell as a result of the exchange offer will involve the indirect acquisition of control or significant shareholdings in such regulated subsidiaries or affiliates of Banco Sabadell, which may require, in accordance with the applicable legislation in each case, obtaining the authorization or non-opposition of the competent regulatory supervisory bodies in Spain or in jurisdictions other than Spain, as applicable. As a result, according to the information available to BBVA, the authorization or non-opposition with respect to the indirect acquisition of control or significant shareholdings in regulated subsidiaries or affiliates of Banco Sabadell is subject to the prior notification to or the authorization or non-opposition of the following competent regulatory supervisory bodies:

ii.

iii.

(Mexico), Banco Atlántico (Bahamas) Bank & Trust Ltd. (in liquidation) (Bahamas) and Financiera Iberoamericana, S.A. (Cuba), in accordance with Law 10/2014 of June 26, on the regulation, supervision and solvency of credit institutions and Royal Decree 84/2015 of February 13, which develops Law 10/2014 of June 26, on the regulation, supervision and solvency of credit institutions. The ECB’s non-opposition was obtained on September 5, 2024.

iv.

vi.

vii.

The Directorate-General of Insurance and Pension Funds in relation to the indirect acquisition of a significant shareholding in Bansabadell Pensiones, E.F.G.P, S.A., Spanish pension funds manager company in which Banco Sabadell has a significant shareholding, in accordance with Royal Legislative Decree 1/2002, of November 29, approving the consolidated text of the law of regulation of pension plans and funds. On June 4, 2024, BBVA submitted the required communication to the Directorate-General for Insurance and Pension Funds informing about the indirect acquisition of a significant stake in Bansabadell Pensiones E.F.G.P, S.A. and no express or tacit authorization from the Directorate-General for Insurance and Pension Funds is required thereafter.

viii.

ix.

The Central Bank of Morocco (Bank Al Maghrib) in relation to the indirect change of control of Banco Sabadell’s branch in Casablanca (Morocco).

xi.

The FINRA in relation to the acquisition of indirect control of Sabadell Securities USA, Inc., U.S. broker-dealer subsidiary of Banco Sabadell.

xii.

The Florida Division of Securities in relation to the acquisition of indirect control of Sabadell Securities USA, Inc., U.S. broker-dealer subsidiary of Banco Sabadell.

BBVA has notified or requested the corresponding authorizations or declarations of non-opposition from the aforementioned competent regulatory supervisory bodies, other than the authorization from FINRA, as explained under “The Exchange Offer—Governmental and Regulatory Authorizations”.

BBVA cannot provide any assurance that all required approvals or authorizations outstanding as of the date of this offer to exchange/prospectus will be obtained in a timely manner or at all. If any of the above governmental and regulatory approvals and authorizations are not obtained, and the exchange offer is completed, BBVA may be subject to fines or other administrative sanctions, may be required to divest the relevant subsidiary or affiliate, or material assets of such subsidiary or affiliate, for which the relevant authorization has not been obtained, may lose certain licenses required to continue to conduct such Banco Sabadell affiliate’s operations consistent with past practice or may not be able to vote the securities indirectly held by it of the affiliated entities.

Because the exchange ratio is fixed, the value of the BBVA shares you will receive as a result of the exchange offer is likely to fluctuate.

If you tender into, and do not withdraw your Banco Sabadell shares from, the exchange offer and the exchange offer is completed, you will receive one newly-issued BBVA share and €0.29 in cash for each 5.0196 Banco Sabadell shares tendered. While the exchange ratio will be subject to the potential adjustments described under “The Exchange Offer—Dividend Payments”, the exchange ratio will not be adjusted to reflect any changes in the market prices of any of the securities of either company. As a result, and subject to the potential adjustments described under “The Exchange Offer—Dividend Payments”, you will receive a fixed number of newly-issued BBVA shares in connection with the exchange offer, and changes in the market prices of these securities will affect the value of what you will receive.

Since there will be no adjustment to the exchange ratio for changes in the market price of either the BBVA shares or the Banco Sabadell shares, the value of the BBVA shares to be delivered to holders of Banco Sabadell who tender their Banco Sabadell shares into the exchange offer could be considerably higher or lower than it was at the time the exchange ratio was determined. Changes in operations and prospects of BBVA or Banco Sabadell since that time, general market and economic conditions, and other factors both within and outside BBVA’s and Banco Sabadell’s control may significantly alter the relative value of the companies at the time the exchange offer is completed.

The market prices of the BBVA shares and the Banco Sabadell shares are likely to fluctuate before completion of the exchange offer and this will affect the value represented by the exchange ratio both in terms of

the Banco Sabadell shares tendered by you and what you will receive in exchange. The equivalent cash consideration per Banco Sabadell share resulting from the application of the weighted average price per BBVA share in the three-month period before the publication of BBVA’s announcement of its intention to make the exchange offer to the exchange ratio, in accordance with Article 14.4 of the Spanish Takeover Regulation, is €2.12 per Banco Sabadell share. Such equivalent cash consideration is provided for illustrative purposes only.

If the price of the BBVA shares declines, holders of Banco Sabadell shares could receive less value for their Banco Sabadell shares upon completion of the exchange offer than the value calculated on the date the exchange offer was announced, as of the date of the filing of this offer to exchange/prospectus or as of the date such holders of Banco Sabadell shares made their election and tendered their Banco Sabadell shares into the exchange offer.

The market prices of the BBVA shares and the Banco Sabadell shares are subject to general price fluctuations in the market for publicly-traded equity securities and have experienced significant volatility in the past. Market price variations in these securities could result from actual or investors’ perceptions of changes in the businesses, financial condition, results of operations or prospects of BBVA or Banco Sabadell prior to and/or following the exchange offer, regulatory considerations, legal proceedings, exchange rates, general market and economic conditions and other factors beyond the control of BBVA or Banco Sabadell. In addition, the ongoing businesses of Banco Sabadell and BBVA may be adversely affected by actions taken by Banco Sabadell or BBVA in connection with the exchange offer, including payment by the companies of certain costs relating to the exchange offer, including certain legal, accounting, financing and financial and other advisory fees. Changes in operations and prospects of BBVA or Banco Sabadell since the exchange ratio was determined, general market and economic conditions, and other factors both within and outside BBVA’s and Banco Sabadell’s control will not result in an adjustment of the exchange ratio.

In addition, a significant period of time may pass between the commencement of the exchange offer and the expiration date. Therefore, at the time you tender your Banco Sabadell shares pursuant to the exchange offer, you will not know the exact market value of the BBVA shares that you will receive if the exchange offer is completed.

Since BBVA did not have access to non-public information regarding Banco Sabadell, BBVA’s ability to accurately anticipate all losses, costs and other liabilities that may be incurred in connection with the exchange offer is necessarily limited. Additionally, any errors or omissions in the information publicly available to BBVA relating to Banco Sabadell may have affected BBVA’s analysis, estimations and determinations with respect to the exchange offer.

In deciding to make the exchange offer, evaluating the risks and merits of the exchange offer and determining the terms and conditions of the exchange offer, BBVA did not have access to non-public information regarding Banco Sabadell. BBVA has instead conducted its analysis on Banco Sabadell using solely publicly-available information, assuming the accuracy and material completeness thereof. The absence of access to non-public information regarding Banco Sabadell necessarily limits BBVA’s ability to accurately anticipate and evaluate the consequences of completing the exchange offer, including any losses, costs or other liabilities that may be incurred as a result thereof.

For example, without access to non-public information regarding Banco Sabadell, BBVA may have failed to discover liabilities, contingent or otherwise, or operating or other matters relating to Banco Sabadell’s business that are not disclosed in publicly-available information concerning Banco Sabadell. Any such undisclosed liabilities or matters could require significant effort and expense to address and could ultimately have an adverse effect on BBVA’s business, financial condition, results of operations and prospects.

Furthermore, completion of the exchange offer may constitute a breach or default under agreements or instruments of Banco Sabadell, or otherwise result in the acceleration of obligations (including, without

limitation, payment obligations) or changes to rights thereunder or the termination thereof. Banco Sabadell (and, the BBVA Group, given Banco Sabadell would then be a member of the BBVA Group) may incur liabilities relating to any such breach or default and may also be unable to replace a terminated agreement or instrument on comparable terms or at all, in the event such a replacement is deemed necessary. Depending on the importance of a terminated agreement or instrument to Banco Sabadell’s business, failure to replace that agreement or instrument on similar terms or at all may increase the costs to BBVA of operating Banco Sabadell’s business or prevent BBVA from operating part or all of Banco Sabadell’s business.

Additionally, while BBVA has assumed the accuracy and completeness of publicly-available information concerning Banco Sabadell, such information may contain errors or omissions. Since BBVA was not involved in the preparation of such information, it cannot give assurance that such information is accurate and complete. Any errors or omissions in the information publicly available to BBVA relating to Banco Sabadell may have affected BBVA’s analysis and estimations of the risks and merits of the exchange offer (including BBVA’s assumptions with respect to the future operations, profitability, asset quality and other matters relating to Banco Sabadell, including the anticipated synergies expected to result from the exchange offer), its decision to make the exchange offer and its determination of the terms and conditions of the exchange offer.

As a result of the foregoing, BBVA may not have anticipated all losses, costs and other liabilities that may be incurred in connection with the exchange offer if the exchange offer is completed or may have failed to accurately analyze or estimate the consequences of completing the exchange offer, either of which could have an adverse effect on the business, results of operations, financial condition or prospects of BBVA after completion of the exchange offer.

The omission from this offer to exchange/prospectus of certain non-public information regarding Banco Sabadell may make it more difficult for you to decide whether to tender your Banco Sabadell shares into the exchange offer.

The SEC’s Form F-4 sets out certain disclosure requirements regarding both BBVA and Banco Sabadell which must be provided in an offer to exchange/prospectus included in a registration statement on Form F-4. BBVA has included herein certain publicly-available information relating to Banco Sabadell in order to comply with regulatory requirements. However, not all of the information related to Banco Sabadell required by Form F-4 is publicly available. As contemplated by Rule 409 under the Securities Act, BBVA has requested that Banco Sabadell provide certain information relating to Banco Sabadell that is not publicly available. However, Banco Sabadell’s management has not cooperated with BBVA in the preparation of this offer to exchange/prospectus or provided such requested information to BBVA. Consequently, BBVA has relied on Rule 409 under the Securities Act to omit from this offer to exchange/prospectus certain information regarding Banco Sabadell otherwise required by Form F-4. For example, the historical consolidated financial statements of Banco Sabadell included in this offer to exchange/prospectus as Appendix I have been prepared in accordance with IFRS-EU and we cannot give assurance that such consolidated financial statements comply with IFRS-IASB standards. Such consolidated financial statements have not been audited under U.S. GAAS and are therefore not considered audited financial statements under SEC rules and no audit report has been included herein on such consolidated financial statements. Additionally, certain information required of Banco Sabadell by Form F-4 by reference to Form 20-F, including certain information required by Items 5 and 11 of Form 20-F, is not publicly available and is therefore not included in this offer to exchange/prospectus. BBVA will amend or supplement this offer to exchange/prospectus to provide any information BBVA receives from Banco Sabadell, if BBVA receives the information on a timely basis before the expiration time of the exchange offer and considers it to be material, complete, reliable and appropriate. As a result of the omission of certain information regarding Banco Sabadell from this offer to exchange/prospectus, it may be more difficult for holders of Banco Sabadell shares to decide whether to tender their Banco Sabadell shares into the exchange offer.

The pro forma financial information included herein is based on Banco Sabadell’s publicly-available information, and may not represent the actual historical financial information of the combined group as if the business combination had taken place.

In preparing the pro forma financial information included in this offer to exchange/prospectus BBVA did not have access to non-public information regarding Banco Sabadell. As a result, BBVA prepared the pro forma financial information using solely publicly-available information regarding Banco Sabadell and historical financial information of BBVA. The adjustments included in the pro forma financial information solely include those that are factually supportable on the basis of the information that is publicly available to BBVA. The unaudited pro forma adjustments included in the pro forma financial information, the value of the consideration that would be paid if the exchange offer were completed (i.e., the estimated value of the capital increase), the accounting allocation of the purchase price made in accordance with IFRS 3 as well as the estimated fair value of assets, liabilities and contingent liabilities to be acquired are preliminary and subject to change, since they have been calculated following a preliminary analysis based on publicly-available financial information for the year ended December 31, 2023 and for the six months ended June 30, 2024, as applicable. The pro forma financial information differs from information previously publicly disclosed by BBVA regarding the expected financial impacts of the exchange offer, which included prospective information and was prepared on the basis of estimates made by BBVA based on BBVA’s own experience in prior acquisitions and customary market practices and methodologies observed in similar transactions, whereas the pro forma financial information included herein has been prepared in compliance with applicable SEC rules.

Differences between the preliminary estimates included herein and the final acquisition accounting will likely occur, and these differences could be material. The differences, if any, could have a material impact on the accompanying pro forma financial information. In accordance with paragraphs 45 and B67 of IFRS 3 “Business Combinations”, it is possible to extend the valuation measurement period to one year from the date the transaction takes place.

Furthermore, given the absence of information in Banco Sabadell’s consolidated financial statements as of and for the year ended December 31, 2023 and Banco Sabadell’s condensed consolidated interim financial statements as of and for the six months ended June 30, 2024 regarding the extent of macro hedging accounting that could potentially fail to comply with IFRS-IASB, BBVA is not able to calculate the harmonization adjustments that would need to be applied to the consolidated financial information of Banco Sabadell as of any date or for any period in order to make such information compliant with IFRS-IASB. Accordingly, BBVA has not made any harmonization adjustments to the consolidated financial information of Banco Sabadell as of any date or for any period to make such information compliant with IFRS-IASB.

As a result of the foregoing, the accompanying pro forma financial information may not represent the actual historical financial information of the combined group as if the business combination had taken place.

BBVA may fail to fully realize the expected benefits and synergies of completing the exchange offer.

BBVA may fail to fully realize the expected benefits and synergies of completing the exchange offer, including the substantial cost synergies described below, in the time, manner or amounts currently expected as a result of, among other things, risks associated with the integration process, including BBVA’s inability to merge with Banco Sabadell.

Risks associated with the integration process

BBVA may fail to successfully consolidate or (if a merger is not completed) otherwise coordinate BBVA’s businesses with those of Banco Sabadell, rationalize duplicative administrative functions or benefit from anticipated lower funding costs. For example, if a merger is completed, the operational integration of Banco Sabadell into the BBVA Group (including the migration of Banco Sabadell’s IT system to BBVA) could prove to

be particularly difficult and complex, may substantially divert management’s time, attention and resources and may be more expensive, time consuming and resource intensive than anticipated. The difficulties that could be encountered include integrating personnel, operations and systems, coordinating the geographically dispersed organizations, distraction of management and employees from operations and changes in corporate culture, retaining existing customers and attracting new customers, maintaining business relationships and inefficiencies associated with the integration of the operations of the companies.

Failure to successfully integrate or otherwise coordinate the businesses and operations of BBVA and Banco Sabadell could result in the failure to realize some or all of the anticipated benefits from the transaction, including cost savings and other operating efficiencies, and could have an adverse effect on the business, results of operations, financial condition or prospects of BBVA and Banco Sabadell after completion of the exchange offer.

BBVA’s inability to merge with Banco Sabadell

BBVA is undertaking the exchange offer to acquire control of Banco Sabadell in order to be in a position to, subject to relevant approvals, integrate both businesses and create a stronger combined group through the merger of both companies, which BBVA expects to result in substantial cost synergies. BBVA has projected cost synergies of approximately €850 million per year before taxes for Spain and Mexico resulting from the intended merger, once they are fully realized.

If the exchange offer is completed, regardless of the percentage of Banco Sabadell shares acquired by BBVA pursuant to the exchange offer, BBVA intends to promote, as soon as possible after the settlement of the exchange offer, and irrespective of whether the thresholds provided for in articles 116 of the Spanish Securities Market Law and 47 of the Spanish Takeover Regulation for the exercise of the right of squeeze-out are met, a merger by absorption of Banco Sabadell by BBVA, with an exchange ratio equivalent, as far as possible, to the consideration offered in the exchange offer, subject to market conditions or other circumstances making it inadvisable to carry out such merger process or carry out such merger process on such terms. The consummation of the intended merger will require the formulation by BBVA and Banco Sabadell’s respective boards of directors of the joint plan of merger, the approval of such joint plan of merger by the respective shareholders of BBVA and Banco Sabadell, and the prior authorization of the Ministry of Economy, Trade and Business, and, accordingly, BBVA can provide no assurance that the intended merger will be consummated. See “The Exchange Offer—Certain Consequences of the Exchange Offer—Squeeze-out and Merger”.

If the intended merger is not consummated for any reason, BBVA believes that it is unlikely to achieve the full costs savings and other operating efficiencies or to realize the revenue and earnings growth that might otherwise be possible. However, BBVA believes that it will be able to capture the majority of the cost synergies that would be realized if the intended merger were consummated. This is because BBVA expects that, even if the merger is not consummated, it will still be able to centralize certain processes of Banco Sabadell in BBVA and to operate both banks from a joint IT platform with multi-bank functionality for all products, services and systems. Further, any savings or growth may occur more slowly than if the squeeze-out right were exercisable or the merger were completed.

The capital, leverage, liquidity, MREL and resolution profile of the combined group if the exchange offer is completed may be adversely affected.

Completion of the exchange offer may adversely affect the CET1 capital ratio, leverage, liquidity, MREL (as defined herein) or resolution profile of the BBVA Group. The estimated impact of the exchange offer on BBVA’s CET1 capital ratio, leverage, liquidity, MREL or resolution profile has been prepared by BBVA based on a number of assumptions and on publicly-available information relating to Banco Sabadell. See “—Since BBVA did not have access to non-public information regarding Banco Sabadell, BBVA’s ability to accurately anticipate all losses, costs and other liabilities that may be incurred in connection with the exchange offer is

necessarily limited. Additionally, any errors or omissions in the information publicly available to BBVA relating to Banco Sabadell may have affected BBVA’s analysis, estimations and determinations with respect to the exchange offer”. As a result, the actual CET1 capital ratio, leverage, liquidity, MREL or resolution profile of the BBVA Group following completion of the exchange offer may be different from BBVA’s estimates.

Completion of the exchange offer may also increase the actual or perceived systemic importance of BBVA within the Spanish financial system. If the relevant regulators were to impose additional capital, leverage, liquidity, MREL or resolution requirements on the BBVA Group following completion of the exchange offer or any other requirements or constraints on the structure or operations of the BBVA Group, BBVA may be required to raise additional capital instruments or MREL or take such actions as are necessary to comply with such constraints.

The prices of the BBVA shares and the Banco Sabadell shares may be adversely affected if the exchange offer is not completed. Additionally, if the exchange offer is not completed, the business operations of BBVA and Banco Sabadell may have been distorted without being able to realize any anticipated benefits from the exchange offer.

If the exchange offer is not completed, the prices of the BBVA shares and the Banco Sabadell shares may decline or otherwise be subject to fluctuations to the extent that the current market prices of BBVA shares and Banco Sabadell shares reflect a market assumption that the exchange offer will be completed. Additionally, matters relating to the exchange offer may have required substantial commitments of time and resources by BBVA’s and Banco Sabadell’s management. Also, if the exchange offer is not completed, BBVA and Banco Sabadell may experience negative reactions from the investment community and their respective customers, which could adversely affect BBVA’s and Banco Sabadell’s businesses.

If the exchange offer is not completed and Banco Sabadell’s board of directors seeks another merger, business combination or other transaction, holders of Banco Sabadell shares cannot be certain that Banco Sabadell will find a party willing to offer equivalent or more attractive consideration than the consideration that holders of Banco Sabadell shares would have received from BBVA in the exchange offer.

In addition, the failure to complete the exchange offer may result in negative publicity or affect BBVA’s and Banco Sabadell’s reputation in the investment community and may affect BBVA’s and Banco Sabadell’s relationship with employees, clients and other partners in the business community.

If the exchange offer is completed, the liquidity and market value of any Banco Sabadell shares not acquired by BBVA could be adversely affected. Further, BBVA may have the right to squeeze-out any remaining holders of Banco Sabadell shares.

The acquisition of Banco Sabadell shares by BBVA pursuant to the exchange offer will reduce the number of holders of Banco Sabadell shares and the number of Banco Sabadell shares that might otherwise trade publicly which, depending on the number of Banco Sabadell shares acquired by BBVA pursuant to the exchange offer, could adversely affect the liquidity and market value of any remaining Banco Sabadell shares held by the public or result in their automatic delisting from the Spanish Stock Exchanges if BBVA obtains the percentage of voting rights required to exercise its squeeze-out right.

Even if the Banco Sabadell shares continue to be listed on the Spanish Stock Exchanges, the number of Banco Sabadell shares that are publicly held by shareholders other than BBVA or its affiliates may be so small that the liquidity of such securities may be significantly reduced, there may no longer be an active trading market for the Banco Sabadell shares and their market value may be significantly affected. As a result of the foregoing, you should not assume that the Banco Sabadell shares will continue to be listed on the Spanish Stock Exchanges, or that there will be a liquid and active trading market or a continuation of current price levels for such securities after completion of the exchange offer.

In addition, if the requirements set forth in articles 116 of the Securities Market Law and 47 of the Spanish Takeover Regulation are met, which would require that (i) the exchange offer is accepted by holders of Banco Sabadell shares representing at least 90% of the Banco Sabadell shares subject to the exchange offer; and (ii) following completion of the exchange offer, BBVA holds a number of Banco Sabadell shares representing at least 90% of the voting rights in Banco Sabadell’s share capital, BBVA will exercise its right to demand the squeeze-out of the remaining Banco Sabadell shares at the same consideration as offered pursuant to the exchange offer (adjusted, as the case may be, as described in this offer to exchange/prospectus). To this effect, within the three Spanish stock exchange business days following the publication of the results of the exchange offer on the website of the CNMV, BBVA will communicate to the CNMV and publicly announce whether or not the requirements to execute a squeeze-out transaction have been met. In that announcement, or within the two following Spanish stock exchange business days, BBVA will announce the date of the squeeze-out transaction. In accordance with article 48.4 of the Spanish Takeover Regulation, such date will be fixed between the 15^th and the 20^th Spanish business day following the date of such announcement. Such decision will be irrevocable. Upon settlement of such squeeze-out transaction, the Banco Sabadell shares will be automatically delisted from the Spanish Stock Exchanges.

Uncertainties associated with the exchange offer may cause a loss of employees and may otherwise affect the future business and operations of BBVA and Banco Sabadell.

Uncertainty about the effect of the exchange offer on employees and customers may have an adverse effect on BBVA and Banco Sabadell. These uncertainties may impair the ability to retain and motivate key personnel until and after the exchange offer is completed and could cause customers, suppliers, licensees, partners and others that deal with Banco Sabadell or BBVA to defer entering into contracts with Banco Sabadell or BBVA or making other decisions concerning Banco Sabadell or BBVA or seek to change existing business relationships with Banco Sabadell or BBVA. With respect to the retention of key employees, BBVA is not aware of any retention plan in place to retain any of Banco Sabadell’s key employees. If key employees of Banco Sabadell depart because of uncertainty about their future roles, Banco Sabadell’s business following the exchange offer could be harmed.

BBVA has not negotiated the price or terms of the exchange offer with Banco Sabadell.

In evaluating the exchange offer, you should be aware that BBVA has not negotiated the price or terms of the exchange offer with Banco Sabadell and neither Banco Sabadell nor its board of directors has approved the exchange offer.

On April 17, 2024, the Chair of BBVA and the Chairman of Banco Sabadell had a meeting in which the Chair of BBVA informed the Chairman of Banco Sabadell of BBVA’s strategic and financial interest in resuming the merger discussions with Banco Sabadell (by reference to the merger transaction discussed between BBVA and Banco Sabadell in 2020 without reaching an agreement), with a view to creating a leading bank, with greater scale and competitive capacity. On April 30, 2024 due to a media report regarding the abovementioned discussions between the Chair of BBVA and the Chairman of Banco Sabadell, BBVA published an inside information notice confirming that the Chairman of Banco Sabadell had been informed of BBVA’s board of directors’ interest in initiating negotiations with Banco Sabadell to explore a potential merger of BBVA and Banco Sabadell. On that same day, BBVA made an indicative proposal in writing to Banco Sabadell relating to a corporate transaction, consisting of the proposed combination of the BBVA Group and the Banco Sabadell Group, through a merger between Banco Sabadell and BBVA (which was published as an inside information notice of BBVA on May 1, 2024 and registered with the CNMV with registry number 2232). On May 6, 2024, Banco Sabadell published an inside information notice registered with the CNMV with registry number 2234, rejecting BBVA’s proposal. Banco Sabadell has refused to negotiate with BBVA regarding its proposal.

Despite BBVA’s attempt to engage with Banco Sabadell’s board of directors and management in friendly discussions regarding a merger, Banco Sabadell’s board of directors and management have refused to engage in discussions with BBVA.

As of the date of this offer to exchange/prospectus, the board of directors of Banco Sabadell has not made any recommendation with respect to the exchange offer.

Banco Sabadell is a Spanish company and Spanish law governs the duties and obligations of Banco Sabadell’s board of directors. Under Spanish law, within ten calendar days after the start of the acceptance period, the board of directors of Banco Sabadell is required to issue and publish a detailed and justified report on the exchange offer that must contain, among other items, its comments for and against the exchange offer, disclosure on any agreement that may exist between Banco Sabadell and BBVA or the directors or shareholders thereof, or between any of them and the board members of Banco Sabadell in relation to the exchange offer, the opinion of Banco Sabadell’s directors with respect to the exchange offer, their intention to tender (or not) the Banco Sabadell shares that they directly or indirectly hold into the exchange offer and the existence and nature of any conflict of interest. The report must also contain the potential consequences of the exchange offer on, and the strategic plans of BBVA with respect to, Banco Sabadell, its employees and the location of its activity centers disclosed by BBVA in the offering documents published in Spain. Further, under Rule 14e-2 of the Securities Exchange Act, Banco Sabadell, no later than ten U.S. business days from the date the exchange offer is first published, sent or given, will need to disclose its position (or inability to take a position) with respect to the exchange offer.

BBVA may become the target of lawsuits in connection with the exchange offer and/or the regulatory and other actions taken in connection with the exchange offer, which could result in substantial costs.

Although no lawsuits have been brought against BBVA or its board of directors in connection with the exchange offer and/or the regulatory and other actions taken in connection with the exchange offer as of the date of this offer to exchange/prospectus, lawsuits may be brought against BBVA in connection with the exchange offer. Even if the lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the exchange offer, then that injunction may delay or prevent the exchange offer from being completed.

BBVA is organized under the laws of Spain and the vast majority of its assets are, and most of its directors and officers reside, outside of the United States. As a result, it may not be possible for shareholders to enforce civil liability provisions of the securities laws of the United States against BBVA or BBVA’s officers and members of BBVA’s board of directors.

BBVA is organized under the laws of Spain. The vast majority of BBVA’s assets are located outside the United States, and most of BBVA’s directors and officers are residents of jurisdictions outside of the United States and the assets of such persons may be located outside of the United States. As a result, it may be difficult for investors to effect service within the United States upon BBVA and its directors or officers, or to enforce judgments obtained in U.S. courts against BBVA or such persons either inside or outside of the United States, or to enforce in U.S. courts judgments obtained against BBVA or such persons in courts in jurisdictions outside the United States, in any action predicated upon the civil liability provisions of the federal securities laws of the United States. There is no certainty that civil liabilities predicated solely upon the federal securities laws of the United States can be enforced in Spain, whether by original action or by seeking to enforce a judgment of U.S. courts. In addition, punitive damages awards in actions brought in the United States or elsewhere may be unenforceable in Spain.

The exchange of Banco Sabadell shares for BBVA shares pursuant to the exchange offer may be a taxable transaction for U.S. federal income tax purposes for U.S. Holders of Banco Sabadell shares.

The U.S. federal income tax consequences of the exchange offer to U.S. Holders depend on whether the exchange offer qualifies as (or as part of) a Reorganization (as defined in “The Exchange Offer—Material U.S. Federal Income Tax Considerations for U.S. Holders”). To qualify as (or as part of) a Reorganization, the

exchange offer must satisfy certain requirements, some of which are based on factual determinations and actions or events after completion of the exchange offer, including events that are not within the control of Banco Sabadell or BBVA. Therefore, no representation can be made as to whether the exchange offer will be a taxable transaction for U.S. federal income tax purposes. Completion of the exchange offer is not conditioned on the exchange offer qualifying as (or as part of) a Reorganization or on the receipt of an opinion of counsel to that effect. Due to the factual uncertainties described above, BBVA has not sought or received an opinion of counsel on the qualification of the exchange offer as (or as part of) a Reorganization. In addition, BBVA has not sought and will not seek any ruling from the U.S. Internal Revenue Service (the “IRS”) regarding any matters relating to the exchange offer, and as a result, even if BBVA were to take the position that the exchange offer qualifies as (or as part of) a Reorganization (if required to take a position), there can be no assurance that the IRS will not assert, or that a court would not sustain, a position that the exchange offer does not qualify as (or as part of) a Reorganization.

If the exchange offer does not qualify as a Reorganization, a U.S. Holder exchanging Banco Sabadell shares for BBVA shares pursuant to the exchange offer will recognize gain or loss, if any, in an amount equal to the difference between the sum of the fair market value of the BBVA shares and any cash received pursuant to the exchange offer, and the U.S. Holder’s tax basis in the Banco Sabadell shares exchanged, in each case determined in U.S. dollars.

Moreover, if Banco Sabadell is or was a passive foreign investment company (a “PFIC”) for any taxable year during which a U.S. Holder owned Banco Sabadell shares, an exchange by the U.S. Holder of Banco Sabadell shares for BBVA shares pursuant to the exchange offer could be taxable under the rules applicable to PFICs, even if the exchange offer qualifies as (or as part of) a Reorganization.

For further discussion, see “The Exchange Offer—Material U.S. Federal Income Tax Considerations for U.S. Holders” in this offer to exchange/prospectus.

U.S. Holders of Banco Sabadell shares should consult their tax advisers regarding the U.S. federal income tax consequences of the exchange offer, including in the event the exchange offer does not qualify as (or as part of) a Reorganization.

Completion of the exchange offer may result in certain tax consequences arising from a change of ownership of Banco Sabadell.

BBVA has had access only to publicly-available information concerning Banco Sabadell’s tax situation. Completion of the exchange offer may result in certain tax consequences arising from a change of ownership of the Banco Sabadell Group. The tax consequences of a change of ownership of a corporation are related, for instance, to (i) the ability to carry-over certain tax relief and other tax benefits, including, but not limited to, tax losses and tax credits incurred prior to completion of the exchange offer; or (ii) certain tax costs not normally associated with the ordinary course of business. Such other tax costs include, but are not limited to, stamp duties, land transfer taxes, franchise taxes and other levies.

Completion of the exchange offer may result in ratings organizations and/or securities analysts taking actions which may adversely affect BBVA’s business, financial condition and results of operations, as well as the market price of BBVA shares.

In connection with completion of the exchange offer, one or more of the main ratings agencies may reevaluate BBVA’s ratings. A downgrade may increase BBVA’s cost of borrowing, may negatively impact BBVA’s ability to raise additional debt capital, may negatively impact BBVA’s ability to successfully compete in the marketplace and may negatively impact the willingness of counterparties to deal with BBVA, each of which could have a material adverse effect on the business, financial condition and results of operations of BBVA and the market value of BBVA shares.

In addition, the trading market for BBVA shares depends in part on the research reports that third-party securities analysts publish about BBVA and its industry. In connection with completion of the exchange offer, one or more of these analysts could downgrade the BBVA shares or issue other negative commentary about BBVA or its industry, which could cause the trading price of BBVA shares to decline.

The trading price of BBVA shares may be affected by factors different from those affecting the price of Banco Sabadell shares.

Upon completion of the exchange offer, holders of Banco Sabadell shares that tender their Banco Sabadell shares into the exchange offer will become holders of BBVA shares. BBVA’s business differs from that of Banco Sabadell in various ways, including in the number and characteristics of the various markets in which they operate, and BBVA’s results of operations, as well as the trading price of the BBVA shares, may be affected by factors different from those affecting Banco Sabadell’s results of operations and the price of the Banco Sabadell shares.

Risks Relating to BBVA

You should read and consider the other risk factors specific to BBVA’s businesses that will also affect BBVA after completion of the exchange offer contained in the 2023 Form 20-F and the BBVA First Half 2024 Results Form 6-K that are incorporated by reference into this offer to exchange/prospectus.

Risks Relating to Banco Sabadell

Following completion of the exchange offer, BBVA will be exposed to other risk factors specific to Banco Sabadell or otherwise arising from the exchange offer.

Following completion of the exchange offer, BBVA will be exposed to other risk factors specific to Banco Sabadell’s business or otherwise arising from the exchange offer. These risks include the following, which have been extracted from Banco Sabadell’s publicly-available information:

Macroeconomic and Political Risks

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Unfavorable global economic conditions, and, in particular, in Spain, or any deterioration in the Spanish or general European financial systems.

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The Banco Sabadell Group’s loan portfolio and its overall business are highly concentrated in Spain and the UK, and therefore the Banco Sabadell Group is particularly exposed to any deterioration in the Spanish and UK economies.

Risks Relating to Banco Sabadell’s and the Banco Sabadell Group’s Business

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The Banco Sabadell Group is exposed to risk of loss from legal and regulatory claims.

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Banco Sabadell and the Banco Sabadell Group are subject to substantial regulation and regulatory and governmental oversight. Adverse regulatory developments or changes in government policy in any of the jurisdictions where the Banco Sabadell Group operates could have a material adverse effect on its business, financial condition, results of operations and prospects.

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Increasingly onerous capital requirements constitute one of Banco Sabadell’s main regulatory challenges. Increasing capital requirements may adversely affect Banco Sabadell’s profitability and create regulatory risk associated with the possibility of failure to maintain required capital levels.

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The Banco Sabadell Group is subject to rules and regulations regarding money laundering and the financing of terrorism which have become increasingly complex and detailed, require improved

systems and sophisticated monitoring and compliance personnel and have become the subject of enhanced government supervision.

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The Banco Sabadell Group’s business is significantly affected by credit and counterparty risk.

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Liquidity risk is inherent in the Banco Sabadell Group’s operations and volatility in global financial markets, particularly in the inter-bank and debt markets, which could materially adversely affect the Banco Sabadell Group’s liquidity position and credit volume.

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Any reduction in Banco Sabadell’s credit rating could increase its cost of funding, adversely affect its interest margins and make its ability to raise new funds or renew maturing debt more difficult.

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The Banco Sabadell Group is exposed to market fluctuations in the price of real estate in various ways.

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The Banco Sabadell Group’s business is subject to fluctuations in interest rates.

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The Banco Sabadell Group is exposed to sovereign debt risk and losses in the market value of the positions held in financial assets.

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The Banco Sabadell Group’s business is dependent on its ability to process a large number of transactions efficiently and accurately, and is therefore exposed to a variety of operational risks including those resulting from process error, system failure, inadequate customer services or the failure of telecommunications or information technology systems.

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The Banco Sabadell Group’s economic hedging may not prevent losses.

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The Banco Sabadell Group faces increasing consolidation of the competition in its business lines.

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The Banco Sabadell Group may generate less income from fee and other commission based transactions in the future.

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The Banco Sabadell Group relies on third parties and affiliates for important products and services.

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The Banco Sabadell Group is exposed to financial risks deriving from climate change.

UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION

The following pro forma financial information gives effect to completion of the exchange offer.

The pro forma financial information included herein is based on, and should be read in conjunction with, the historical financial statements and related notes of BBVA and Banco Sabadell for the applicable periods included in, or incorporated by reference into, as applicable, this offer to exchange/prospectus. The pro forma financial information presented herein has not been audited and is presented exclusively for illustrative purposes. Due to its nature, this information presents a hypothetical scenario and may not represent the actual financial position or results of the BBVA Group and/or the Banco Sabadell Group, and is not necessarily indicative of what the financial situation or results of BBVA would have been under a combined scenario with the Banco Sabadell Group as of June 30, 2024 for purposes of the consolidated pro forma balance sheet, or for the year ended December 31, 2023 and the six months ended June 30, 2024 for purposes of the pro forma income statements, as applicable, nor is it intended to project the financial position or future results of the combined group. In preparing the pro forma financial information included in this offer to exchange/prospectus BBVA did not have access to non-public information regarding Banco Sabadell. As a result, BBVA prepared the pro forma financial information using solely publicly-available information regarding Banco Sabadell, and financial information of BBVA.

Certain financial information included in this exchange offer/prospectus, including, without limitation, the pro forma financial information included herein, has been subject to rounding. As a result, figures shown as totals in tables or elsewhere in this exchange offer/prospectus may not compute due to rounding.

Purpose of Pro Forma Financial Information

The pro forma financial information has been prepared in accordance with Article 11 of Regulation S-X. Its purpose is to reflect the estimated impact of completion of the exchange offer under the assumption that 100% and 50.01%, respectively, of the Banco Sabadell shares are acquired in exchange for newly-issued BBVA shares according to the exchange ratio. See also “—Impact of Other Potential Scenarios in the Pro Forma Financial Information”.

The pro forma financial information includes (i) a combined unaudited condensed consolidated pro forma balance sheet of the BBVA Group as of June 30, 2024 which would result from the combination of the consolidated balance sheet of the Banco Sabadell Group and the consolidated balance sheet of the BBVA Group as of such date; and (ii) combined unaudited condensed consolidated pro forma income statements of the BBVA Group for the year ended December 31, 2023 and for the six months ended June 30, 2024, respectively, which would result from the combination of the consolidated income statement of the Banco Sabadell Group and the consolidated income statement of the BBVA Group for such periods, in each case assuming completion of the exchange offer, the acquisition of 100% and 50.01%, respectively, of the Banco Sabadell shares in exchange for newly-issued BBVA shares according to the exchange ratio, and the related change of control of Banco Sabadell, had occurred, with respect to the pro forma income statements, as of January 1, 2023, and with respect to the pro forma consolidated balance sheet, as of June 30, 2024.

Sources of Information

The pro forma financial information reflects the business combination of the BBVA Group and the Banco Sabadell Group using, exclusively, publicly-available information of Banco Sabadell as of and for the year ended December 31, 2023 (principally the consolidated financial statements of Banco Sabadell as of and for the year ended December 31, 2023 which are included in Appendix I hereto) and as of and for the six months ended June 30, 2024 (principally the condensed consolidated interim financial statements of Banco Sabadell as of and for the six months ended June 30, 2024 which are included in Appendix I hereto). Neither Banco Sabadell’s consolidated financial statements as of and for the year ended December 31, 2023 nor Banco Sabadell’s condensed consolidated interim financial statements as of and for the six months ended June 30, 2024 have been

audited under U.S. GAAS, and such financial statements are therefore not considered audited financial statements under SEC rules. Consequently, no audit report has been included herein on such consolidated financial statements. However, as a listed company in Spain, Banco Sabadell is subject to ongoing reporting requirements under CNMV rules, including that its annual financial statements be audited under prevailing legislation regulating the audit of accounts in Spain. The pro forma financial information has been prepared using the audited consolidated financial statements of BBVA as of and for the year ended December 31, 2023 and the unaudited condensed interim consolidated financial statements of BBVA as of and for the six months ended June 30, 2024 included in the 2023 Form 20-F and the BBVA First Half 2024 Results Form 6-K, respectively, each incorporated by reference herein.

Basis of Presentation

The pro forma financial information has been prepared on the basis of the historical consolidated financial information of each of BBVA and Banco Sabadell, which has been prepared, in the case of BBVA, in compliance with IFRS-IASB and, in the case of Banco Sabadell, in accordance with IFRS-EU. See “Note on Banco Sabadell Information—Description of Certain Differences Between IFRS-EU and IFRS-IASB”.

The pro forma financial information presented herein includes:

•

A combined unaudited consolidated pro forma condensed balance sheet of the BBVA Group as of June 30, 2024, which has been prepared based on the unaudited consolidated balance sheets of each of BBVA and Banco Sabadell as of June 30, 2024 incorporating preliminary fair value adjustments assuming completion of the exchange offer, the acquisition of 100% and 50.01%, respectively, of the Banco Sabadell shares in exchange for newly-issued BBVA shares according to the exchange ratio, and the related change of control of Banco Sabadell, had occurred as of June 30, 2024.

•

A combined unaudited consolidated pro forma condensed income statement of the BBVA Group for the six months ended June 30, 2024, which has been prepared based on the unaudited consolidated income statements of each of BBVA and Banco Sabadell for the six months ended June 30, 2024, assuming completion of the exchange offer, the acquisition of 100% and 50.01%, respectively, of the Banco Sabadell shares in exchange for newly-issued BBVA shares according to the exchange ratio, and the related change of control of Banco Sabadell, had occurred as of January 1, 2023.

•

A combined unaudited consolidated pro forma condensed income statement of the BBVA Group for the year ended December 31, 2023, which has been prepared based on the audited consolidated income statements of each of BBVA and Banco Sabadell for the year ended December 31, 2023, assuming completion of the exchange offer, the acquisition of 100% and 50.01%, respectively, of the Banco Sabadell shares in exchange for newly-issued BBVA shares according to the exchange ratio, and the related change of control of Banco Sabadell, had occurred as of January 1, 2023.

•

Accompanying explanatory notes describing the sources of information, assumptions and estimates for the preparation of the pro forma financial information.

For the preparation of the pro forma financial information of the combined group, IFRS 3 “Business Combinations” has been considered. Additionally, in order to complete such valuation and adjust the impacts of the business combination in accordance with paragraphs 45 and B67 of such standard, the standard establishes the possibility of extending the valuation measurement period to one year from the date the transaction takes place.

Assumptions and Estimates Used

The pro forma financial information reflects the acquisition by BBVA of Banco Sabadell assuming acceptance of the exchange offer by holders of Banco Sabadell shares representing 100% (irrespective of whether or not the merger is consummated) and 50.01% (without the merger being consummated), respectively, of Banco

Sabadell’s share capital in exchange for one newly-issued BBVA share and €0.29 in cash for each 5.0196 Banco Sabadell shares (irrespective of whether or not the intended merger is consummated). The adjustments included in the pro forma financial information solely include those that are factually supportable on the basis of the information that is publicly available to BBVA. See “—Sources of Information” above.

The main assumptions and estimates used in the preparation of the pro forma financial information are the following:

•

The outstanding shares of Banco Sabadell subject to the exchange offer are those outstanding as of June 30, 2024 (5,440 million Banco Sabadell shares).

•

BBVA’s capital increase is carried out in the proportion of one newly-issued BBVA share for each 5.0196 Banco Sabadell shares, without any further adjustment for any dividends paid. Therefore, the number of BBVA shares to be issued in the event of an acquisition of 100% and 50.01% of the Banco Sabadell shares is approximately 1,084 million BBVA shares and approximately 542 million BBVA shares, respectively. The acquisition costs of the business combination will be determined on the basis of the trading price of the BBVA shares delivered to holders of Banco Sabadell shares in accordance with the exchange ratio applicable upon completion of the exchange offer. The estimated value of such capital increase in the event of an acquisition of 100% and 50.01% of the Banco Sabadell shares amounts to approximately €10,136 million and €5,069 million, respectively, using a trading price of €9.35 per BBVA share (which corresponds to the price per BBVA share as of June 28, 2024, and which corresponds to a trading price of €1.863 per Banco Sabadell share upon application of the exchange ratio of one newly-issued BBVA share for each 5.0196 Banco Sabadell shares). See “—Impact of Other Potential Scenarios in the Pro Forma Financial Information—Sensitivity of Goodwill/(Negative Goodwill) to the Trading Price of the BBVA Shares” below.

•

Additionally, the exchange offer cash consideration is considered part of the pro forma adjustments, that is €314 million and €157 million in the event of an acquisition of 100% and 50.01% of the Banco Sabadell shares, respectively (€0.29 in cash for each 5.0196 shares of Banco Sabadell). For purposes of preparing the pro forma financial information as of June 30, 2024, the estimated value of the capital increase in the event of an acquisition of 100% and 50.01% of the Banco Sabadell shares amounts to approximately €10,450 million and €5,226 million, respectively.

•

On the other hand, the costs associated with the exchange offer or the cash payment corresponding to the settlement of any fractional shares have not been considered, since they are not considered material.

•

The pro forma financial information does not reflect any cost savings, financing synergies or restructuring costs arising or resulting from the integration of the operations of BBVA and Banco Sabadell that are expected to materialize in the future. Costs incurred as a result of any integration of the two entities will be accounted for when incurred.

•

No transactions or balances have been identified between BBVA and Banco Sabadell that could have a significant impact on the pro forma financial information, therefore no elimination or adjustment of such nature has been made.

•

The exchange offer has been treated as an acquisition, with BBVA as the accounting acquirer and Banco Sabadell as the accounting acquiree. Therefore, the adjustments include the elimination of Banco Sabadell’s equity and the impact of the estimated value of the consideration that would be paid if the exchange offer were completed (i.e., the estimated value of the capital increase).

•

The combined unaudited condensed consolidated pro forma income statement for the year ended December 31, 2023 and the combined unaudited condensed consolidated pro forma income statement for the six months ended June 30, 2024 were prepared considering the balance sheet adjustments calculated with the information available as of June 30, 2024. The result attributable to the owners of the parent reflected in the combined unaudited condensed consolidated pro forma balance sheet as of

June 30, 2024 does not coincide with the profit reflected in the combined unaudited condensed consolidated pro forma income statement for the six months ended June 30, 2024.

•

BBVA has not made any adjustments related to differences in accounting policies between BBVA and Banco Sabadell given that BBVA has only used publicly-available information relating to Banco Sabadell and BBVA cannot adequately evaluate the adjustments that would need to be made to eliminate such differences on the basis of such information. Additionally, given the absence of information in Banco Sabadell’s consolidated financial statements as of and for the year ended December 31, 2023 and Banco Sabadell’s condensed consolidated interim financial statements as of and for the six months ended June 30, 2024 regarding the extent of macro hedging accounting that could potentially fail to comply with IFRS-IASB, BBVA is not able to calculate the harmonization adjustments that would need to be applied to the consolidated financial information of Banco Sabadell as of any date or for any period in order to make such information compliant with IFRS-IASB. Accordingly, BBVA has not made any harmonization adjustments to the consolidated financial information of Banco Sabadell as of any date or for any period to make such information compliant with IFRS-IASB.

•

The exchange offer will generate certain legal, accounting and valuation costs and other professional fees, as well as other costs for the registration and issuance of shares, which will be recorded in accordance with IFRS 3 “Business Combinations”, IFRS 9 “Financial Instruments” and IAS 32 “Financial Instruments: Presentation”. As of the date of the preparation of the pro forma financial information, the majority of these costs had not been incurred, and, given that these costs are not estimated to be significant, such costs have not been taken into account in the preparation of the pro forma financial information.

The unaudited pro forma adjustments included in the pro forma financial information, the value of the consideration that would be paid if the exchange offer were completed (i.e., the estimated value of the capital increase), the accounting allocation of the purchase price made in accordance with IFRS 3 as well as the estimated fair value of assets, liabilities and contingent liabilities to be acquired are preliminary and subject to change, since they have been based exclusively on publicly-available financial information for the year ended December 31, 2023 and for the six months ended June 30, 2024. The pro forma financial information differs from information previously publicly disclosed by BBVA regarding the expected financial impacts of the exchange offer, which included prospective information and was prepared on the basis of estimates made by BBVA based on BBVA’s own experience in prior acquisitions and customary market practices and methodologies observed in similar transactions, whereas the pro forma financial information included herein has been prepared in compliance with applicable SEC rules. These estimates relate mainly to the valuation of loan portfolios, client relationships (including possible intangibles related to client deposits), investments, costs for terminating agreements with third parties, property and potential contingencies. For purposes of the preparation of the pro forma financial information, BBVA has used the book value of the relevant assets and liabilities as the best reference for these estimations in the absence of additional information, which is currently not available to BBVA. When the relevant information is available, final estimates of fair value could differ materially from those estimated in the pro forma financial information.

Differences between the preliminary estimates included herein and the final acquisition accounting will likely occur when the value of the consideration is determined once control of Banco Sabadell is acquired and the necessary valuation analysis to finalize the purchase price allocation exercise are performed and any necessary accounting changes and adjustments related to such acquisition of control are identified, and these differences could be material. The differences, if any, could have a material impact on the accompanying pro forma financial information. In accordance with paragraphs 45 and B67 of IFRS 3 “Business Combinations”, it is possible to extend the valuation measurement period to one year from the date the transaction takes place.

Main Adjustments to the Pro Forma Financial Information

The pro forma financial information presented below reflects the acquisition by BBVA of 100% and 50.01%, respectively, of Banco Sabadell shares in exchange for newly-issued BBVA shares and the exchange offer cash consideration, in accordance with the exchange ratio.

The assignment of the provisional purchase price implicit in the exchange ratio and included in the pro forma financial information is preliminary, is subject to subsequent adjustments as additional information becomes available and additional analyses are performed through completion of the exchange offer, and has been made solely with the aim of preparing the pro forma financial information presented below.

The pro forma financial information presented below includes a breakdown of the principal adjustments included based solely upon publicly-available information regarding Banco Sabadell corresponding to the year ended December 31, 2023 and the six months ended June 30, 2024, as applicable.

The adjustments included in the pro forma financial information solely include those that are factually supportable on the basis of the information that is publicly available to BBVA.

Combined Unaudited Condensed Consolidated Pro Forma Balance Sheet as of June 30, 2024

The table below presents the combined unaudited condensed consolidated pro forma balance sheet of the BBVA Group as of June 30, 2024, as if the exchange offer had been completed as of such date and assuming the acquisition by BBVA of 100% and 50.01%, respectively, of Banco Sabadell shares.


	BBVA June 30, 2024		Banco Sabadell June 30, 2024^(*)		Aggregated		Pro forma adjustments assuming acquisition of 100% of Banco Sabadell shares			Combined pro forma balance sheet assuming acquisition of 100% of Banco Sabadell shares		Pro forma adjustments assuming acquisition of 50.01% of Banco Sabadell shares			Combined pro forma balance sheet assuming acquisition of 50.01% of Banco Sabadell shares
	(€ million)
Cash, cash balances in central banks and other demand deposits		45,055		29,502		74,557		(2,421	)		72,136		(2,264	)		72,293
Financial assets held for trading		123,821		3,110		126,931					126,931					126,931
Financial assets at fair value through other comprehensive income		60,691		6,528		67,219					67,219					67,219
Financial assets at amortized cost (a)		481,213		190,489		671,702		(1,304	)		670,398		(1,304	)		670,398
Intangible assets		2,379		2,494		4,873		(2,395	)		2,479		(2,395	)		2,479
Of which goodwill ()		760		1,018		1,778		(1,018	)		759		(1,018	)		759
Of which other intangible assets (b)		1,620		1,476		3,096		(1,376	)		1,719		(1,376	)		1,719
Other assets (c)		46,375		12,205		58,580		813			59,393		813			59,393

Total assets		759,534		244,328		1,003,862		(5,306	)		998,556		(5,149	)		998,713


	BBVA June 30, 2024			Banco Sabadell June 30, 2024^(*)			Aggregated			Pro forma adjustments assuming acquisition of 100% of Banco Sabadell shares			Combined pro forma balance sheet assuming acquisition of 100% of Banco Sabadell shares			Pro forma adjustments assuming acquisition of 50.01% of Banco Sabadell shares			Combined pro forma balance sheet assuming acquisition of 50.01% of Banco Sabadell shares
	(€ million)
Financial liabilities held for trading		93,546			2,862			96,408						96,408						96,408
Financial liabilities at amortized cost (d)		565,752			225,027			790,779			(156	)		790,623			(156	)		790,623
Other liabilities (c) (e)		43,145			2,041			45,186			77			45,263			77			45,263

Total liabilities		702,443			229,930			932,373			(79	)		932,294			(79	)		932,294
Shareholders’ funds		69,656			14,820			84,476			(5,684	)		78,792			(11,087	)		73,389
Of which capital		2,824			680			3,504			(149	)		3,355			(414	)		3,090
Of which share premium		19,184			7,695			26,879			2,224			29,103			(2,735	)		24,144
Of which result attributable to owners of the parent during the period		4,994			791			5,785			(119	)		5,666			(455	)		5,330
Of which negative goodwill (badwill) recognized in results		—			—			—			672			672			336			336
Of which reserves and other components of shareholders’ funds		42,654			5,654			48,308			(7,640	)		40,669			(7,483	)		40,826
Accumulated other comprehensive income (loss)		(16,416	)		(457	)		(16,873	)		457			(16,416	)		457			(16,416	)
Minority interests		3,851			35			3,886						3,886			5,560			9,446

Total equity ()*		57,091			14,398			71,489			(5,227	)		66,262			(5,070	)		66,419
Total equity and total liabilities		759,534			244,328			1,003,862			(5,306	)		998,556			(5,149	)		998,713

(*)	Information subject to rounding given that Banco Sabadell’s publicly-available financial information is expressed in thousands of euros and the pro forma financial information is expressed in millions of euros.

(**)	Goodwill of Banco Sabadell:

The value of goodwill from previous business combinations broken down in the consolidated financial statements of Banco Sabadell as of and for the six months ended June 30, 2024 does not represent an identifiable asset that would be acquired upon completion of the exchange offer according to IFRS 3 “Business Combinations”. Accordingly, this value must be removed from the acquiring entity’s balance sheet before calculating the goodwill resulting from completion of the exchange offer. The negative adjustments made in the event of an acquisition of 100% and 50.01% of Banco Sabadell shares amount to €1,018 million.

(***)

Variation in total equity:

As described in this offer to exchange/prospectus, an exchange ratio of one newly-issued BBVA share for each 5.0196 Banco Sabadell shares has been established for the exchange offer (subject to adjustments, as the case may be, as described in this offer to exchange/prospectus). In the preparation of the pro forma financial information, the trading price of BBVA’s shares as of June 28, 2024 has been used as a main assumption in the determination of the cost of completing the exchange offer. See “—Impact of Other Potential Scenarios in the Pro Forma Financial Information—Sensitivity of Goodwill/(Negative Goodwill) to the Trading Price of the BBVA Shares” below.

Acquisition of 100% of Banco Sabadell shares

Considering the number of Banco Sabadell shares outstanding (5,440,221,447 shares, with a par value of €0.125 each), the maximum number of BBVA shares to be issued in exchange for Banco Sabadell shares, at the aforementioned exchange ratio, would be 1,083,795,810 BBVA shares, with a par value of €0.49 each.

Based on this maximum number of BBVA shares to be issued in the capital increase and on the trading price of BBVA shares as of June 30, 2024, the cost of completing the exchange offer would amount to €10,450 million. The actual cost will vary depending on the trading price of BBVA shares upon the settlement of the exchange offer.

The pro forma adjustments included in the combined unaudited condensed consolidated pro forma balance sheet reflect a capital increase of €531 million, which amount corresponds to the par value of the new BBVA shares to be issued, and an increase in share premium in the amount of €9,919 million, which represents the difference between such trading price and the par value of the BBVA shares to be issued. These adjustments have been recorded under shareholders’ funds (share capital and share premium) in the combined unaudited condensed consolidated pro forma balance sheet.

The pro forma adjustments also include the elimination of Banco Sabadell’s net equity attributable to Banco Sabadell as of June 30, 2024 in an amount of €13,928 million (after deducting the dividend paid on October 1, 2024 by Banco Sabadell for an amount of €435 million corresponding to €0.08 euros multiplied by 5,440 million Banco Sabadell shares) (affecting shareholders’ funds and accumulated other comprehensive income (loss)).

Based on financial information as of and for the six months ended June 30, 2024, and taking into account the pro forma adjustments described in this section, the difference between the consideration offered and total equity as of June 30, 2024 would provisionally result in negative goodwill (badwill) of €672 million reflected in the combined unaudited condensed consolidated pro forma income statement and as shown in the below table:


	June 30, 2024
	(€ million)
Estimated transaction cost		10,450
Estimated fair value of assets and liabilities acquired		11,122
Net equity attributable to Banco Sabadell		13,928
Estimated adjustments to fair value		(2,806	)

Resulting negative goodwill (badwill)		672

Additionally, (i) BBVA’s total equity has been adjusted due to the dividend paid by BBVA on October 10, 2024, amounting to €1,671 million (corresponding to €0.29 multiplied by 5,763 million BBVA shares) and (ii) cash, cash balances in central banks and other demand deposits has been adjusted by the dividends paid by BBVA and Banco Sabadell.

Acquisition of 50.01% of Banco Sabadell shares

Considering the number of Banco Sabadell shares outstanding (5,440,221,447 shares, with a par value of €0.125 each), the maximum number of BBVA shares to be issued in exchange for Banco Sabadell shares in a scenario where BBVA acquires 50.01% of Banco Sabadell shares, at the aforementioned exchange ratio, would be 542,006,285 BBVA shares, with a par value of €0.49 each.

Based on this maximum number of BBVA shares to be issued in the capital increase and on the trading price of BBVA shares as of June 30, 2024, the cost of completing the exchange offer would amount to €5,226 million. The actual cost will vary depending on the trading price of BBVA shares upon the settlement of the exchange offer.

The pro forma adjustments included in the combined unaudited condensed consolidated pro forma balance sheet reflect a capital increase of €266 million, which amount corresponds to the par value of the new BBVA shares to be issued, and an increase in share premium in the amount of €4,960 million, which represents the difference between such trading price and the par value of the BBVA shares to be issued. These adjustments have been recorded under shareholders’ funds (share capital and share premium) in the combined unaudited condensed consolidated pro forma balance sheet.

The pro forma adjustments also include the elimination of Banco Sabadell’s net equity attributable to Banco Sabadell as of June 30, 2024 in an amount of €13,928 million (after deducting the dividend paid on October 1, 2024 by Banco Sabadell for an amount of €435 million corresponding to €0.08 multiplied by 5,440 million Banco Sabadell shares) (affecting shareholders’ funds and accumulated other comprehensive income (loss)) and the recognition of minority interests equivalent to a 49.99% stake of Banco Sabadell for €5,560 million.

Based on financial information as of and for the six months ended June 30, 2024, and taking into account the pro forma adjustments described in this section, the difference between the consideration offered and total equity as of June 30, 2024 would provisionally result in negative goodwill (badwill) of €336 million reflected in the combined unaudited condensed consolidated pro forma income statement and as shown in the below table:


	June 30, 2024
	(€ million)
Estimated transaction cost		5,226
Minority interest recognition		5,560
Estimated fair value of assets and liabilities acquired		11,122
Net equity attributable to Banco Sabadell		13,928
Estimated adjustments to fair value		(2,806)

Resulting negative goodwill (badwill)		336

Notes on the pro forma adjustments to the combined unaudited condensed consolidated pro forma balance sheet as of June 30, 2024 for fair value:

(a)	Fixed-income portfolios (included under “Financial assets at amortized cost”):

Fixed-income portfolios at amortized cost include financial instruments that mostly correspond to level 1 in the fair value hierarchy, to the extent their fair value is directly observable in the market. Therefore, the adjustment made in the table above is based on the fair value broken down in the condensed consolidated interim financial statements of Banco Sabadell as of and for the six months ended June 30, 2024. The adjustment to financial assets at amortized cost in the event of an acquisition of 100% and 50.01% of Banco

Sabadell shares amounts to €(1,304) million. The fair value of these assets could fluctuate depending on the evolution of interest rates, the credit risk premium and any changes to the maturity of the instruments. Accordingly, the related adjustment ultimately made upon completion of the exchange offer could vary significantly.

(b)	Other intangible assets:

BBVA has estimated an adjustment of €(1,376) million to the value of other intangible assets in the event of an acquisition of 100% and 50.01% of Banco Sabadell shares, mainly related to software in use by Banco Sabadell in geographies in which BBVA already has a presence. The related adjustment ultimately made upon completion of the exchange offer could vary significantly once the necessary detailed analysis with respect to these assets is performed.

(c)	Tax impacts:

The adjustments described herein would result in corresponding tax impacts, calculated on the basis of the general corporate income tax rate currently in effect in Spain (30%). Broken down in the event of an acquisition of 100% and 50.01% of Banco Sabadell shares, the adjustment would be as follows: with respect to assets (included under “other assets”), fixed-income portfolio (€391 million), other intangible assets (€413 million) and legal contingencies (€9 million), and with respect to liabilities (included under “other liabilities”), own issuances of financial instruments (€(47) million).

(d)	Own issuances of financial instruments (included under “Financial liabilities at amortized cost”):

Own issuances of financial instruments include financial instruments that mostly correspond to level 1 in the fair value hierarchy, to the extent their fair value is directly observable in the market. Therefore, the adjustment made in the table above is based on the fair value broken down in the condensed consolidated interim financial statements of Banco Sabadell as of and for the six months ended June 30, 2024. The adjustment corresponding to debt issuances in the event of an acquisition of 100% and 50.01% of Banco Sabadell shares amounts to €(156) million. The fair value of these liabilities could fluctuate depending on the evolution of interest rates, the credit risk premium and any changes to the maturity of the instruments. Accordingly, the related adjustment ultimately made upon completion of the exchange offer could vary significantly.

(e)	Contingencies (included under “Other liabilities”)

The maximum amount of contingencies related to mortgage floor clauses, not covered by provisions, has been estimated at €30 million, as detailed in the consolidated financial statements of Banco Sabadell as of and for the year ended December 31, 2023, as updated information as of June 30, 2024 is not included in the condensed consolidated interim financial statements of Banco Sabadell as of and for the six months ended June 30, 2024.

Combined Unaudited Condensed Consolidated Pro Forma Income Statement for the six months ended June 30, 2024

The table below presents the combined unaudited condensed consolidated pro forma income statement of the BBVA Group for the six months ended June 30, 2024, as if the exchange offer had been completed as of January 1, 2023 and assuming the acquisition by BBVA of 100% and 50.01%, respectively, of Banco Sabadell shares.


	BBVA Six months ended June 30, 2024			Banco Sabadell Six months ended June 30, 2024 (*)			Aggregated			Pro forma adjustments assuming acquisition of 100% of Banco Sabadell shares			Combined pro forma income statement assuming acquisition of 100% of Banco Sabadell shares			Pro forma adjustments assuming acquisition of 50.01% of Banco Sabadell shares			Combined pro forma income statement assuming acquisition of 50.01% of Banco Sabadell shares
	(€ million)
Net interest income (a)		12,993			2,493			15,486			74			15,559			74			15,559
Results of entities valued by the equity method & dividend income		95			87			182						182						182
Net fees and commissions		3,842			674			4,516						4,516						4,516
NTI and exchange differences (net)		1,886			37			1,923						1,923						1,923
Other operating income and expenses from commercial and insurance activity		(1,371	)		(230	)		(1,601	)					(1,601	)					(1,601	)

Gross income		17,446			3,061			20,507			74			20,580			74			20,580
Administration and amortization expenses (b)		(6,859	)		(1,515	)		(8,374	)		118			(8,256	)		118			(8,256	)
Provisions or reversal of provisions		(38	)		0			(38	)					(38	)					(38	)
Impairment or reversal of impairment of financial assets not measured at fair value with changes in results and net gains or losses due to modification		(2,839	)		(361	)		(3,200	)					(3,200	)					(3,200	)
Negative goodwill (badwill) recognized in results		—			—			—						—						—
Other income (expenses)		71			(31	)		40						40						40

Profit (loss) before taxes from continuing operations		7,780			1,154			8,934			192			9,125			192			9,125
Tax expense or income related to profit or loss from continuing operations (c)		(2,525	)		(362	)		(2,887	)		(57	)		(2,944	)		(57	)		(2,944	)

Profit (loss)		5,255			792			6,047			134			6,181			134			6,181
Attributable to minority interests (non-controlling interests)		261			1			263						263			463			725

Attributable to the owners of the parent		4,994			791			5,785			134			5,919			(329	)		5,456

Additional Tier 1 securities adjustment		(189	)		(56	)		(245	)					(245	)					(217	)
Weighted-average number of shares		5,784									1,084			6,868			542			6,326
Basic and diluted earnings (losses) per share from continuing operations		0.83												0.83						0.83

(*)	Information subject to rounding given that Banco Sabadell’s publicly-available financial information is expressed in thousands of euros and the pro forma financial information is expressed in millions of euros.

(**)	The pro forma adjustments to the combined unaudited condensed consolidated pro forma income statement for the six months ended June 30, 2024 have been prepared considering the pro forma adjustments to the combined unaudited condensed consolidated pro forma balance sheet as of June 30, 2024.

Notes on the pro forma adjustments to the combined unaudited condensed consolidated pro forma income statement for the six months ended June 30, 2024:

(a)	Valuation of assets and liabilities recorded at amortized cost:

As a consequence of the change in the valuation of assets and liabilities recorded at amortized cost, the accrual of interest is impacted by the adjustments described in (a) and (d) above under “Notes on the pro forma adjustments to the combined unaudited condensed consolidated pro forma balance sheet as of June 30, 2024 for fair value”, resulting in higher or lower net interest income, as applicable.

(b)	Amortization:

The removal of software from the consolidated balance sheet would result in a lower amortization expense for the year.

(c)	Tax impacts:

The adjustments described above (other than negative goodwill (badwill)) would result in corresponding tax impacts, calculated on the basis of the general corporate income tax rate currently in effect in Spain (30%).

Combined Unaudited Condensed Consolidated Pro Forma Income Statement for the year ended December 31, 2023

The table below presents the combined unaudited condensed consolidated pro forma income statement of the BBVA Group for the year ended December 31, 2023, as if the exchange offer had been completed as of January 1, 2023 and assuming the acquisition by BBVA of 100% and 50.01%, respectively, of Banco Sabadell shares.


	BBVA Year ended Dec. 31, 2023			Banco Sabadell Year ended Dec. 31, 2023 (*)			Aggregated			Pro forma adjustments assuming acquisition of 100% of Banco Sabadell shares			Combined pro forma income statement assuming acquisition of 100% of Banco Sabadell shares			Pro forma adjustments assuming acquisition of 50.01% of Banco Sabadell shares			Combined pro forma income statement assuming acquisition of 50.01% of Banco Sabadell shares
	(€ million)
Net interest income (a)		23,089			4,723			27,812			147			27,959			147			27,959
Results of entities valued by the equity method & dividend income		144			131			275						275						275
Net fees and commissions		6,288			1,386			7,674						7,674						7,674
NTI and exchange differences (net)		2,183			68			2,251						2,251						2,251
Other operating income and expenses from commercial and insurance activity		(2,163	)		(447	)		(2,610	)					(2,610	)					(2,610	)

Gross income		29,542			5,862			35,404			147			35,551			147			35,551
Administration and amortization expenses (b)		(12,308	)		(3,015	)		(15,323	)		236			(15,087	)		236			(15,087	)
Provisions or reversal of provisions		(373	)		(6	)		(379	)					(379	)					(379	)
Impairment or reversal of impairment of financial assets not measured at fair value with changes in results and net gains or losses due to modification		(4,428	)		(824	)		(5,252	)					(5,252	)					(5,252	)
Negative goodwill (badwill) recognized in results (c)											672			672			336			336
Other income (expenses)		(13	)		(125	)		(138	)					(138	)					(138	)

Profit (loss) before taxes from continuing operations		12,419			1,891			14,310			1,055			15,365			719			15,029
Tax expense or income related to profit or loss from continuing operations (d)		(4,003	)		(557	)		(4,560	)		(115	)		(4,675	)		(115	)		(4,675	)

Profit (loss)		8,416			1,334			9,750			940			10,690			604			10,354
Attributable to minority interests (non-controlling interests)		397			1			398						398			801			1,199

Attributable to the owners of the parent		8,019			1,332			9,351			940			10,291			(197	)		9,154

Additional Tier 1 securities adjustment		(345	)		(115	)		(460	)					(460	)					(403	)
Weighted-average number of shares		5,954									1,084			7,038			542			6,496
Basic and diluted earnings (losses) per share from continuing operations (e)		1.29												1.40						1.35

(*)

Information subject to rounding given that Banco Sabadell’s publicly-available financial information is expressed in thousands of euros and the pro forma financial information is expressed in millions of euros.

(**)	The pro forma adjustments to the combined unaudited condensed consolidated pro forma income statement for the year ended December 31, 2023 have been prepared considering the pro forma adjustments to the combined unaudited condensed consolidated pro forma balance sheet as of June 30, 2024.

Notes on the pro forma adjustments to the combined unaudited condensed consolidated pro forma income statement for the year ended December 31, 2023:

(a)	Valuation of assets and liabilities recorded at amortized cost:

As a consequence of the change in the valuation of assets and liabilities recorded at amortized cost, the accrual of interest is impacted by adjustments similar to those described in (a) and (d) above under “Notes on the pro forma adjustments to the combined unaudited condensed consolidated pro forma balance sheet as of June 30, 2024 for fair value”, resulting in higher or lower net interest income, as applicable.

(b)	Amortization:

The removal of software from the consolidated balance sheet would result in a lower amortization expense for the year.

(c)	Negative goodwill (badwill) resulting from the exchange offer:

Based on financial information as of and for the six months ended June 30, 2024, and taking into account the pro forma adjustments described herein, the difference between the consideration offered and total equity as of June 30, 2024 would provisionally result in negative goodwill (badwill) of €672 million and €336 million in the event of an acquisition of 100% and 50.01% of the Banco Sabadell shares, respectively, in each case reflected in the combined unaudited condensed consolidated pro forma income statement.

The amount of goodwill at the time of completion of the exchange offer may differ, both in amount and in sign (i.e., positive or negative goodwill), depending on the trading price of the BBVA shares at such time, which will determine the value of the consideration paid in the context of the exchange offer, the evolution of the Banco Sabadell Group’s results of operations and assets, as well as changes in the value of Banco Sabadell’s assets and liabilities resulting from, among others, changes in market conditions.

(d)	Tax impacts:

(e)	Basic and diluted earnings (losses) per share from continuing operations:

For the calculation of the combined basic and diluted earnings (losses) per share from continuing operations, the negative goodwill (badwill) recognized in results has been taken into account. If excluded, the combined earnings (losses) per share from continuing operations would amount to €1.30 both in the event of an acquisition of 100% and 50.01% of the Banco Sabadell shares.

Impact of Other Potential Scenarios in the Pro Forma Financial Information

The description below contemplates the potential impact that other scenarios would have on the pro forma financial information.

Sensitivity of Goodwill/(Negative Goodwill) to the Trading Price of the BBVA Shares

The sensitivity of goodwill/(negative goodwill), estimated in accordance with the assumptions and information described above, to a positive or negative variation of €0.50 in the BBVA share price is approximately +/- €540 million.

•

Assuming a trading price of €10.24 per BBVA share (the weighted average price per BBVA share during the three-month period prior to the publication of BBVA’s announcement of its intention to make the exchange offer) and €2.04 per Banco Sabadell share (the equivalent price per Banco Sabadell share resulting from the application of the exchange ratio of 5.0196) and the exchange offer cash consideration, the goodwill resulting from completion of the exchange offer would be approximately €290 million and €145 million, in the event of an acquisition of 100% and 50.01% of the Banco Sabadell shares, respectively.

•

Assuming a trading price of €9,288 per BBVA share (corresponding to the closing price per BBVA share on October 11, 2024) and €1,850 per Banco Sabadell share (the equivalent price per Banco Sabadell share resulting from the application of the exchange ratio of 5.0196) and the exchange offer cash consideration, the negative goodwill (badwill) resulting from completion of the exchange offer would be approximately €741 million and €371 million, in the event of an acquisition of 100% and 50.01% of the Banco Sabadell shares, respectively.

COMPARATIVE MARKET PRICE AND DIVIDEND PER SHARE INFORMATION


Banco Sabadell Shares			BBVA Shares
High	Low	Close	High	Low	Close
€1.83	€1.79	€1.80	€10.43	€10.23	€10.29

The table below sets forth, for the periods indicated, the high and low closing prices of Banco Sabadell shares and BBVA shares as reported on the Spanish Stock Exchanges, respectively, as well as any dividend payments made. The share prices included below have not been adjusted for the payment of any dividend payment made after their respective reported date.


	Banco Sabadell Shares						BBVA Shares
	High		Low		Dividends		High		Low		Dividends
First Quarter 2021	€	0.49	€	0.35		N/A		€4.86		€3.76		N/A
Second Quarter 2021	€	0.68	€	0.46		N/A		€5.43		€4.29	€	0.059
Third Quarter 2021	€	0.73	€	0.51		N/A		€5.91		€4.91		N/A
Fourth Quarter 2021	€	0.73	€	0.55		N/A		€6.28		€4.70		€0.08
First Quarter 2022	€	0.94	€	0.59		N/A		€6.06		€4.49		N/A
Second Quarter 2022	€	0.86	€	0.68		€0.03		€5.32		€4.15		€0.23
Third Quarter 2022	€	0.79	€	0.60		N/A		€4.99		€4.00		N/A
Fourth Quarter 2022	€	0.91	€	0.70		€0.02		€5.70		€4.58		€0.12
First Quarter 2023	€	1.33	€	0.91		€0.02		€7.45		€5.78		N/A
Second Quarter 2023	€	1.08	€	0.88		N/A		€7.03		€6.12		€0.31
Third Quarter 2023	€	1.16	€	1.02		N/A		€7.71		€6.83		N/A
Fourth Quarter 2023	€	1.35	€	1.03		€0.03		€8.70		€7.39		€0.16
First Quarter 2024	€	1.46	€	1.11		N/A		€11.04		€8.00		N/A
Second Quarter 2024	€	1.94	€	1.40		€0.03		€11.24		€9.02		€0.39
Third Quarter 2024		€2.04		€1.71		N/A		€10.20		€8.62		N/A
Fourth Quarter 2024 (through October 11, 2024)		€1.87		€1.78		€0.08	€	9.65		€9.23		€0.29

INFORMATION ABOUT BBVA

Additional information about the BBVA Group is included in BBVA’s 2023 Form 20-F and BBVA First Half 2024 Results Form 6-K, which are incorporated by reference in this offer to exchange/prospectus.

As of June 30, 2024, the total number of outstanding BBVA shares and voting rights was 5,763,285,465.

There is no individual or legal entity that exercises control over BBVA pursuant to article 4 of the Securities Market Law.

BBVA’s Interest in Banco Sabadell

In the 12 months prior to the date of publication of BBVA’s announcement of its intention to make the exchange offer, neither BBVA, nor its directors, nor any of the companies within its group, nor, to the best of BBVA’s knowledge, any of the directors of the companies in its group, have carried out or agreed to carry out on its own account transactions involving shares of Banco Sabadell, or securities giving the right to subscribe or acquire shares of Banco Sabadell, whose voting rights would be attributable to BBVA pursuant to article 5 of the Spanish Takeover Regulation.

As BBVA is a credit institution that offers a full range of banking and investment and asset management services in the ordinary course of its business, the CNMV, further to BBVA’s request for authorization to continue to undertake certain transactions with clients in the ordinary course of business until completion of the exchange offer, has given it guidelines that generally prohibit the acquisition of Banco Sabadell shares by the BBVA Group for its own account, except for certain transactions of BBVA with respect to Banco Sabadell shares in relation to the execution, settlement or hedging of transactions with clients in the ordinary course of business, which would not trigger the consequences of article 32 of the Spanish Takeover Regulation. With respect to the exchange offer, BBVA understands that any such acquisition of Banco Sabadell shares will not trigger the consequences provided for in articles 32.3 and 32.4 of the Spanish Takeover Regulation, as such acquisitions are made in connection with the execution, settlement or hedging of transactions with clients in the ordinary course of business. The treatment granted by the CNMV to such transactions by BBVA over Banco Sabadell shares pursuant to BBVA’s request is based on the fact that they are made in the ordinary course of business, in accordance with past practice, and not for the purpose of acquiring Banco Sabadell shares or facilitating or influencing the exchange offer.

The exemptions granted by the CNMV are generally in line with exemptive relief from the provisions of Rule 14e-5 under the Exchange Act granted to BBVA by the SEC on May 29, 2024. Subject to certain exceptions, Rule 14e-5 under the Exchange Act prohibits a person making a tender offer for an equity security, as

well as such offeror’s dealer-manager, the advisers or affiliates of such offeror or dealer-manager and any person acting, directly or indirectly, in concert with such persons, from, directly or indirectly, purchasing or arranging to purchase any securities subject to a tender offer, or any securities immediately convertible into, exchangeable for or exercisable for such securities, except as part of such tender offer. This prohibition applies from the time of public announcement of the tender offer until the tender offer expires. The relief granted to BBVA by the SEC permits, subject to certain enumerated conditions set forth in the relief letter, BBVA, BBVA’s subsidiaries and their respective affiliates and separately identifiable departments to purchase or arrange to purchase Banco Sabadell Securities prior to and during the conduct of, but outside of, the exchange offer in the ordinary course of their businesses. Such purchases or arrangements to purchase may not be carried out for the purpose of promoting or otherwise facilitating the exchange offer or for the purpose of creating actual, or apparent, active trading in, or maintaining, or affecting the prices of the Banco Sabadell Securities. For a description of the trading activities included within the scope of the SEC’s relief, see “The Exchange Offer—Relief Requested from the SEC—Tender Offer Rules Exemptive Relief”.

BBVA, BBVA’s subsidiaries and their respective affiliates and separately identifiable departments intend to effect such purchases in the ordinary course of their businesses in accordance with the guidelines given by the CNMV and in reliance on the relief granted by the SEC, in each case subject to the conditions imposed by such regulators and otherwise in accordance with applicable law.

As of the date of this offer to exchange/prospectus, BBVA has not appointed any member of the board of directors or of the management of Banco Sabadell.

INFORMATION ABOUT BANCO SABADELL

All information contained in this section relating to Banco Sabadell has been taken from publicly-available sources published by Banco Sabadell (including, in particular, its consolidated financial statements as of and for the years ended December 31, 2023, 2022 and 2021, its condensed consolidated interim financial statements as of and for the six months ended June 30, 2024, its annual reports as of and for the years ended December 31, 2023, 2022 and 2021, its consolidated interim directors’ report for the first six months of 2024, its second quarter 2024 quarterly financial report and its Euro Medium Term Note Program base prospectus dated May 14, 2024). BBVA was not involved in the preparation of such publicly-available information regarding Banco Sabadell and cannot verify such information. Such information is included herein in order to comply with regulatory requirements. To the extent permitted under applicable law, none of BBVA or any of its officers or directors assumes any responsibility for the accuracy or completeness of such information or for any failure by Banco Sabadell to disclose events or facts which may have occurred or which may affect the significance or accuracy of any such information, but which are unknown to BBVA.

BBVA is not affiliated with Banco Sabadell, and BBVA has not had access to Banco Sabadell’s books and records. Therefore, non-public information concerning Banco Sabadell was not used by BBVA for the purpose of preparing this section. Pursuant to Rule 409 under the Securities Act, BBVA has requested that Banco Sabadell provide BBVA with certain information regarding the business, operations and financial condition of Banco Sabadell. BBVA will amend or supplement this offer to exchange/prospectus to provide any information BBVA receives from Banco Sabadell, if BBVA receives the information on a timely basis before the expiration time and considers it to be material, complete, reliable and appropriate.

Certain of the financial information relating to Banco Sabadell included in this offer to exchange/prospectus has been derived from the consolidated financial statements of Banco Sabadell as of and for the years ended December 31, 2023, 2022 and 2021 and the condensed consolidated interim financial statements of Banco Sabadell as of and for the six months ended June 30, 2024 included as Appendix I to this offer to exchange/prospectus. Such consolidated financial statements have not been audited under U.S. GAAS and are therefore not considered audited financial statements under SEC rules. Consequently, no audit report has been included herein on such consolidated financial statements. However, as a listed company in Spain, Banco Sabadell is subject to ongoing reporting requirements under CNMV rules, including that its annual financial statements be audited under prevailing legislation regulating the audit of accounts in Spain.

In this section, references to “Group”, “Sabadell Group”, “we”, “us”, refer to the Banco Sabadell Group or Banco Sabadell, as applicable, references to “management” refer to Banco Sabadell’s management and references to “expects”, “expectations” or similar terms refer to the expectations of Banco Sabadell’s management. References to the relevant publicly-available documents of Banco Sabadell from which the information relating to Banco Sabadell included below has been extracted are included solely for the benefit of the reader, and such documents are not incorporated by reference into this offer to exchange/prospectus.

I. Incorporation and Status

The information in this subsection has been extracted from page 136 of Banco Sabadell’s Euro Medium Term Note Program base prospectus dated May 14, 2024.

Banco Sabadell and its consolidated subsidiaries compose the Sabadell Group. Banco Sabadell was incorporated on December 31, 1881 in the town of Sabadell, near Barcelona for an unlimited term and conducts its business under the commercial name “Banco Sabadell”.

II. Description of Banco Sabadell

Overview

The information in this subsection has been extracted from page 137 of Banco Sabadell’s Euro Medium Term Note Program base prospectus dated May 14, 2024.

Banco Sabadell is one of the largest banks in Spain’s financial system, with total consolidated assets and total consolidated loans and advances to customers of €235,173 million and €152,260 million, respectively, as of December 31, 2023. Banco Sabadell is the controlling company of the Sabadell Group, which comprised, as of December 31, 2023, a total of 60 companies that the Sabadell Group fully consolidates. In addition, there were 22 associated companies.

The main activity carried out by the Group in the different jurisdictions in which it operates is banking, and fundamentally commercial banking through a wide range of products and services for large and medium-sized companies, SMEs, retailers and self-employed workers, professional groups, other individuals and bancassurance. The main customers of the Sabadell Group are SMEs and individual clients in Spain, with a total customer base that is now six times larger than it was in 2008. As of December 31, 2023, the Group operated a total of 1,420 branches (1,178 in Spain). The Group’s retail banking activities are conducted primarily through this branch network.

The Group’s primary source of liquidity is generated from its customer deposits. In addition, the Group has access to a variety of short and long-term funding sources in both the domestic and international markets as well as from the Eurosystem against eligible collateral. These funding programs provide the Group with a broad range of funding options, products, maturities and investors. Its total available pool of liquidity amounted to €58,558 million as of December 31, 2023.

The Sabadell Group operates in Spain through the following brands: SabadellHerrero (commercial banking in Asturias and León), SabadellGuipuzcoano (commercial banking in the Basque Country, Navarre and La Rioja), SabadellUrquijo Private Banking (private banking), Solbank (commercial banking in the Canary Islands, the Balearic Islands and in the southern and eastern coastal areas of mainland Spain) and SabadellGallego (commercial banking in Galicia). The brands are supported by a variety of distribution channels, including the Group’s extensive branch network, telephone (both fixed line and mobile) banking and internet banking. The Group believes its multi-brand and multi-platform model is supported by one of the most advanced and scalable IT platforms in Spain. The Sabadell Group also believes that its multi-brand and multi-channel market presence increases its appeal to existing and prospective customers and its state-of-the-art IT platform allows the Group to segment its customer base with a high degree of accuracy to best match its products and services to its customers’ needs.

For each of the years ended December 31, 2023 and 2022 the Group’s consolidated pre-provisions income (calculated as gross income less operating expenses and depreciation and amortization) was €2,847 million and €2,328 million, respectively, and its consolidated profit attributable to the Group was €1,332 million and €889 million, respectively.

Business Segments

The information in this subsection has been extracted from pages 138 to 144 of Banco Sabadell’s Euro Medium Term Note Program base prospectus dated May 14, 2024.

The Group employs a multi-brand strategy, targeting through each brand a specific customer base and/or geographic segment and building on the goodwill associated with those of its brands that have a long history in the Spanish banking sector. In 2015, Banco Sabadell unified the Sabadell Atlántico and SabadellCAM brands to strengthen its image, with “Sabadell” being the flagship brand that operates throughout most of the Spanish market. The Group’s main banking brands are Sabadell, SabadellHerrero, SabadellGuipuzcoano, SabadellUrquijo Private Banking, Solbank and SabadellGallego.

The Group is organized in the following business segments: Banking Business in Spain, Banking Business in the United Kingdom and Banking Business in Mexico. Banking Business in Spain, in turn, includes the Retail Banking, the Business Banking and the Corporate and Investment Banking business units.

Banking Business in Spain

Retail Banking

The Retail Banking business unit offers financial products and services to individual persons with a particular purpose. These include investment products and medium- and long-term finance, such as consumer loans, mortgages and leasing or rental services, as well as short-term finance. Funds come mainly from customer deposits and sight accounts, savings insurance, mutual funds and pension plans. The main services also include methods of payment such as cards and insurance products in their diverse modalities.

Business Banking

The Business Banking business unit offers financial products and services to legal and individual persons with a business purpose, serving all types of companies with a turnover of up to €200 million as well as the institutional sector. The products and services offered to companies are based on short and long-term financing solutions, cash surplus treasury solutions, products and services to guarantee the daily operation of collections and payments through any channel and geographic area, as well as risk hedging and insurance banking products.

Corporate and Investment Banking

The Corporate and Investment Banking business unit offers financial solutions and advisory services to large corporates and financial institutions in Spain and abroad, through branches throughout Spain and in 15 other countries.

Banking Business in the United Kingdom

TSB offers a wide range of retail banking services and products to individuals and small business banking customers in the UK, including personal loans, savings, accounts, mortgages and credit/debt cards. TSB has 5,426 employees and is a challenger bank for the future growth of Banco Sabadell in the UK. TSB has a clear strategy vis-a-vis retail clients and small companies with a very well defined products spectrum.

Banking Business in Mexico

As part of the internationalization process that commenced under the previous strategic framework, Banco Sabadell decided to focus on Mexico, a country representing a clear opportunity as an attractive market for the banking business. The Banking Business in Mexico is carried out through Banco Sabadell, S.A. Institución de Banca Múltiple (a Mexican bank) and SabCapital, S.A. de C.V., SOFOM, E.R. (a Mexican multi-purpose financial company).

Banking Business in Mexico comprises the following business lines: (i) Corporate Banking (with the focus on companies and major corporations) and (ii) Business Banking (which reproduces the Group’s original

business relationship model). During 2023, work was undertaken to create a Retail Banking business unit that will be rolled out in 2024, with a digital product aimed at gathering customer funds, offering attractive interest rates and the convenience of being able to withdraw funds at any time.

III. Operating and Financial Review

Key Factors Affecting Results of Operations

The information in this subsection has been extracted from pages 59 and 60 of Banco Sabadell’s annual report as of and for the year ended December 31, 2023.

Monetary Policy

During 2023, the central banks of developed countries continued their cycle of interest rate hikes, although the pace was somewhat less intense than in 2022. It was only towards the end of the year that they considered that rates had reached sufficiently restrictive levels to keep inflation under control, at which point they indicated that the rate hike cycle might have reached its end.

In the Eurozone, the ECB implemented an unprecedented tightening of its monetary policy. Thus, it continued with the rate hike cycle that had begun in 2022 and ended the year with the deposit facility rate standing at a record high of 4.00%. In addition, the size of its balance sheet continued to shrink, due to the maturity of TLTRO III funding transactions and the beginning of the process to reduce its holdings of assets bought under its asset purchase program. Additionally, it announced that it would stop reinvesting a portion of maturing securities purchased under the pandemic emergency purchase program in the second half of 2024. Meanwhile, the ECB stopped remunerating banking institutions’ mandatory reserves.

In the United States, the Federal Reserve (Fed) continued to pursue its rate hike cycle, with official interest rates reaching a range of 5.25%-5.50% mid-year. At its last meeting of the year, the Fed signaled that the rate hike cycle had come to an end and that it would even begin discussions about future rate cuts, which provided additional support for the performance of various financial assets. In terms of balance sheet policy, its balance sheet reduction was interrupted following the financial instability triggered by the collapse of Silicon Valley Bank, as a result of which the Fed established new extraordinary funding facilities for the banking system. Nevertheless, once the event was resolved, the Fed continued its balance sheet reduction by electing not to reinvest maturing debt.

In the United Kingdom, the Bank of England (BoE) raised the base rate to 5.25%, after inflationary pressures intensified at the beginning of the year. In addition, it continued with the balance sheet reduction program, unwinding practically all of its corporate bond holdings (around £18 billion) and £93 billion of government debt acquired under the asset purchase facility. In the same vein, the BoE announced that it would continue to downsize its balance sheet and estimated a further reduction of 100 billion pounds of government debt holdings in the next tax year (October 2023—September 2024).

In Mexico, the central bank ended its rate hike cycle in the first half of the year with the official interest rate standing at 11.25% and kept it unchanged during the second half of 2023. Banxico has not yet begun to discuss possible rate cuts and continued to hold the opinion that inflation risks remained skewed to the upside. This stood in contrast with the situation of other Latin American countries, such as Brazil, Chile and Peru, where the central banks started to make rate cuts in the second half of the year. This was also the tone in China, where the authorities adopted monetary loosening measures, albeit cautiously, to support economic recovery. By contrast, benchmark interest rates were hiked sharply in Turkey, in a context of double-digit inflation.

Results of Operations

June 30, 2024 versus June 30, 2023

The information in this subsection has been extracted from pages 9 to 15 of Banco Sabadell’s second quarter 2024 quarterly financial report.


	1H 2023			1H 2024			Year-on-year change (%)
	(€ million, except %)
Net interest income		2,270			2,493			9.8
Net fees and commissions		697			674			(3.3	)

Core revenues		2,967			3,168			6.8
Net trading income and exchange differences		31			37			18.4
Income from equity method and dividends		72			87			20.6
Other operating income/expense		(261	)		(230	)		(11.9	)

Gross operating income		2,809			3,061			9.0
Operating expenses		(1,204	)		(1,266	)		5.2
Personnel expenses		(717	)		(744	)		3.8
Other general expenses		(487	)		(522	)		7.2
Amortization and depreciation		(274	)		(249	)		(9.0	)
Total costs		(1,478	)		(1,515	)		2.5

Pre-provisions income		1,331			1,546			16.1
Provisions for NPLs		(433	)		(333	)		(23.1	)
Provisions for other financial assets		(7	)		(28	)		—
Other impairments		(29	)		(29	)		1.2
Gains on sale and other results		(13	)		(2	)		(82.5	)

Profit before tax		849			1,154			35.9
Income tax		(285	)		(362	)		27.1
Minority interests		1			1			6.8

Attributable net profit		564			791			40.3

Net Interest Income

Net interest income amounted to €2,493 million as at the end of June 2024, growing by 9.8% year-on-year and by 2.5% in the quarter.

The year-on-year growth was mainly driven by higher loan yields and higher earnings on the fixed-income portfolio, underpinned by interest rates, all of which offset the higher costs of both deposits and wholesale funding, as well as reduced average volumes. In the quarter, it was driven by a higher customer margin, where credit yield growth was underpinned by portfolio repricing and larger volumes.

Customer Margin and Net Interest Margin

The customer margin improved by 29 basis points compared to the end of the second quarter of 2023 and by 9 basis points compared to the previous quarter, standing at 3.18%, driven by the increase in loan yields, which offset the higher year-on-year cost of deposits.

Similarly, the net interest margin as a percentage of average total assets rose by 22 basis points in the year and by 2 basis points in the quarter, reaching 2.10%.

Net Trading Income and Exchange Differences

As at the end of June 2024, this item came to a total of €37 million, increasing in year-on-year terms due to a larger contribution by TSB, but falling during the quarter, mainly due to reduced earnings on overall derivatives.

Net Fees and Commissions

Net fees and commissions amounted to €674 million as at the end of June 2024, representing a reduction of 3.3% year-on-year, mainly due to reduced service fees, particularly fees on payment cards and sight account, as well as reduced asset management fees, where it is worth mentioning fees on pensions funds and insurance brokerage.

In the quarter, they declined by 1.4%, affected by reduced fee income at TSB due to higher costs associated with cards.

Equity-accounted Income and Dividends

This item amounted to €87 million as at the end of June 2024, increasing compared to the end of June 2023, due to the increased contribution of the insurance business. In the quarter, there was a reduction due to a smaller contribution from insurance and fewer earnings in BS Capital investees.

Other Operating Income and Expenses

This item amounted to €(230) million as at the end of June 2024, compared to €(261) million at the end of the previous June. The positive balance variation is mainly explained by the €(76) million recognized in the previous year for the contribution to the Single Resolution Fund (SRF), which offset the negative balance variation caused by the recognition of a higher impact of the banking tax in 2024, which was €(192) million compared to €(156) million recognized in the previous year.

The positive quarterly balance variation is mainly explained by the recognition of the banking tax in the first quarter of the year.

Total Costs

Total costs came to €(1,515) million as at the end of June 2024, reflecting a year-on-year increase of 2.5%, due to both higher staff expenses and higher general expenses, which were counterbalanced by the reduction of amortizations/depreciations.

In quarterly terms, total costs rose by 1.7%, as a result of higher general expenses.

Core Results

Core results (net interest income + fees and commissions – total costs) followed a positive trend, standing at €1,652 million as at the end of June 2024, growing by 11.0% year-on-year and by 1.6% in the quarter, as a result of the good evolution of net interest income.

Provisions for Credit Losses and Other Impairments

This item amounted to €(389) million as at the end of June 2024, compared to €(468) million at the end of June 2023, representing a reduction of 16.9%, due to an improvement of credit provisions.

In the quarter, provisions were down by 13.2%, also due to fewer credit provisions, which neutralized the increase in real estate provisions (which included impairments due to branch closures) and the increase in litigation provisions.

This level of provisions reflects an improvement in the Group’s credit cost of risk, which dropped by 8 basis points in the quarter to stand at 33 basis points, as well as in the total cost of risk, which fell by 4 basis points in the quarter to stand at 46 basis points as at the end of June 2024.

Gains on Sale of Assets and Other Results

Gains on asset sales and other results improved in year on-year terms, as the previous year included higher levels of asset write-offs.

Net Profit

The Group’s net profit amounted to €791 million as at the end of June 2024, increasing by 40.3% year-on-year. In the quarter, this item grew by 56.8%.

Banking Business Spain: June 30, 2024 versus June 30, 2023

The information in this subsection has been extracted from page 28 of Banco Sabadell’s second quarter 2024 quarterly financial report.

Net profit as at the end of June 2024 amounted to €670 million, representing a year-on-year increase of 53.3%, mainly driven by the good evolution of net interest income and reduced provisions.

Net interest income amounted to €1,826 million as at the end of June 2024, growing by 16.1% year-on-year as a result of a higher credit yield and increased revenue from the fixed-income portfolio, underpinned by higher interest rates, all of which served to offset higher costs of both deposits and wholesale funding and reduced average volumes.

Net fees and commissions stood at €610 million, 3.9% less than at the end of June 2023, mainly due to reduced service fees, notably fees on payment cards and sight account, as well as the drop in asset management fees, particularly fees on pension funds and insurance brokerage.

Net trading income and exchange differences amounted to €8 million, representing a year-on-year reduction, mainly due to reduced earnings on overall derivatives.

Equity-accounted results and dividends showed year-on-year growth of 20.6%, due mainly to the increased contribution of the insurance business.

The positive balance variation in Other operating income and expenses is mainly explained by the €(76) million recognized in the previous year for the contribution to the Single Resolution Fund (SRF), which offset the negative balance variation caused by the recognition of a larger impact of the banking tax in 2024, which was €(192) million compared to €(156) million recognized in the previous year.

Total costs recorded a year-on-year increase of 3.6%, due to higher staff expenses and the increase in general expenses.

Provisions and impairments amounted to €(348) million, down by 19.1% year-on-year, due to an improvement in credit provisions.


	1H 2023			1H 2024			Year-on-year change (%)
	(€ million, except %)
Net interest income		1,573			1,826			16.1
Net fees and commissions		635			610			(3.9	)

Core revenues		2,208			2,436			10.3
Net trading income and exchange differences		26			8			(69.8	)
Income from equity method and dividends		72			87			20.6
Other operating income/expense		(232	)		(191	)		(17.3	)

Gross operating income		2,074			2,339			12.8
Operating expenses		(780	)		(817	)		4.8
Amortization and depreciation		(185	)		(183	)		(1.4	)
Total costs		(965	)		(1,000	)		3.6

Pre-provisions income		1,109			1,339			20.8
Total provisions and impairments		(430	)		(348	)		(19.1	)
Capital gains on sale of assets and other results		(12	)		0			(99.8	)

Profit before tax		666			991			48.8
Income tax		(228	)		(320	)		40.4
Minority interest		1			1			6.8

Attributable net profit		437			670			53.3

Banking Business United Kingdom: June 30, 2024 versus June 30, 2023

The information in this subsection has been extracted from page 29 of Banco Sabadell’s second quarter 2024 quarterly financial report.

Net profit amounted to €95 million as at the end of June 2024, representing a year-on-year reduction of 10.2% due to the decline of net interest income.

Net interest income came to a total of €562 million, less than in the first half of 2023, due to the higher cost of deposits and wholesale funding, and also due to reduced volumes, which offset the growth stemming from the higher credit yield. However, in quarter-on-quarter terms, net interest income reversed this trend and increased by 1.7%.

Net fees and commissions amounted to €54 million as at the end of June 2024, representing a year-on-year reduction of 7.0%, mainly due to lower payment card fees, which include an increase in costs.

Total costs amounted to €(449) million, falling by 3.2% year-on-year due to the reduction of amortizations/depreciations, which offset the increase in staff expenses.

Provisions and impairments amounted to €(28) million, representing an increase of €(5) million, due to the recognition of more provisions for litigation.


	1H 2023			1H 2024			Year-on-year change (%)
	(€ million, except %)
Net interest income		603			562			(6.8	)
Net fees and commissions		58			54			(7.0	)

Core revenues		661			615			(6.8	)
Net trading income and exchange differences		5			24			—
Income from equity method and dividends		0			0			—
Other operating income/expense		(20	)		(29	)		43.4

Gross operating income		646			611			(5.4	)
Operating expenses		(387	)		(391	)		0.8
Amortization and depreciation		(76	)		(58	)		(23.6	)
Total costs		(464	)		(449	)		(3.2	)

Pre-provisions income		183			162			(11.1	)
Total provisions and impairments		(23	)		(28	)		24.0
Gains on sale of assets and other results		0			1			—

Profit before tax		160			135			(15.9	)
Income tax		(55	)		(40	)		(27.1	)
Minority interest		0			0			—

Attributable net profit		106			95			(10.2	)

Banking Business Mexico: June 30, 2024 versus June 30, 2023

The information in this subsection has been extracted from page 30 of Banco Sabadell’s second quarter 2024 quarterly financial report.

Net profit as at the end of June 2024 amounted to €26 million, representing a year-on-year increase of 25.5%, mainly due to the increase in core revenues.

Net interest income came to €106 million, growing by 12.4% year-on-year, underpinned by the appreciation of the Mexican peso (in terms of average exchange rate), as at a constant exchange rate it increased by 6.3%, mainly due to larger volumes and a higher credit yield.

Net fees and commissions came to €10 million as at the end of June 2024, increasing by €6 million compared to the first half of the previous year due to higher levels of commercial activity.

Total costs amounted to €(67) million, reflecting year-on-year growth, mainly due to higher general expenses, particularly marketing costs.

Provisions and impairments amounted to €(13) million as at the end of June 2024, representing a year-on-year reduction of 14.6% due to fewer credit provisions.


	1H 2023			1H 2024			Year-on-year change (%)
	(€ million, except %)
Net interest income		94			106			12.4
Net fees and commissions		4			10			142.0

Core revenues		98			116			18.0
Net trading income and exchange differences		0			5			—
Income from equity method and dividends		0			0			—
Other operating income/expense		(10	)		(10	)		4.1

Gross operating income		89			111			25.2
Operating expenses		(37	)		(58	)		59.6
Amortization and depreciation		(12	)		(8	)		(33.0	)
Total costs		(49	)		(67	)		36.2

Pre-provisions income		40			44			11.7
Total provisions and impairments		(15	)		(13	)		(14.6	)
Gains on sale of assets and other results		(1	)		(3	)		107.6

Profit before tax		23			28			22.8
Income tax		(2	)		(2	)		(3.3	)
Minority interest		0			0			—

Attributable net profit		21			26			25.5

2023 versus 2022

The information in this subsection has been extracted from pages 72 to 76 of Banco Sabadell’s annual report as of and for the year ended December 31, 2023. The comparative financial information as of and for the year ended December 31, 2022 included in Banco Sabadell’s annual report as of and for the year ended December 31, 2023 (and included below) has been restated to take into account the implementation of IFRS 17 (please see Note 1.4 to the consolidated financial statements of Banco Sabadell as of and for the year ended December 31, 2023).


	2023			2022			Year-on-year change (%)
	(€ million, except %)
Interest and similar income		8,659			4,989			73.6
Interest and similar expenses		(3,936	)		(1,190	)		230.8

Net interest income		4,723			3,799			24.3
Fees and commissions, net		1,386			1,490			(7.0	)

Core revenue		6,109			5,289			15.5
Gains or (-) losses on financial assets and liabilities and exchange differences		68			104			(34.0	)
Equity-accounted income and dividends		131			156			(15.6	)
Other operating income and expenses		(447	)		(337	)		32.5

Gross income		5,862			5,211			12.5
Operating expenses		(2,496	)		(2,337	)		6.8
Staff expenses		(1,495	)		(1,392	)		7.4
Other general administrative expenses		(1,002	)		(946	)		5.9
Depreciation and amortization		(519	)		(545	)		(4.8	)
Total costs		(3,015	)		(2,883	)		4.6
Memorandum item:
Recurrent costs		(2,982	)		(2,883	)		3.5
Non-recurrent costs		(33	)		—			—

Pre-provisions income		2,847			2,328			22.3
Provisions for loan losses		(813	)		(825	)		(1.5	)


	2023			2022			Year-on-year change (%)
	(€ million, except %)
Provisions for other financial assets		(18	)		(111	)		(84.1	)
Other provisions and impairments		(80	)		(96	)		(17.0	)
Capital gains on asset sales and other revenue		(46	)		(23	)		101.8

Profit/(loss) before tax		1,891			1,273			48.5
Corporation tax		(557	)		(373	)		49.3
Profit or loss attributed to minority interests		1			11			(86.8	)

Profit attributable to the Group		1,332			889			49.8

The average exchange rate used for the cumulative balance of TSB’s income statement is 0.8706 (0.8532 in 2022).

Net Interest Income

Net interest income followed a positive trend, reaching €4,723 million as at the end of 2023, representing year-on-year growth of 24.3%, mainly due to a higher credit yield and improved revenue from the fixed income portfolio, underpinned by higher interest rates, all of which served to offset higher costs of both funds and capital markets and the negative effect of the pound sterling’s depreciation.

Consequently, the net interest margin as a percentage of average total assets stood at 1.93% in 2023 (1.47% in 2022).

The breakdown of net interest income for the years 2023 and 2022, as well as the different components of total investment and funds, was as follows:


	2023								2022								Change						Effect
	Average balance		Profit/(loss)			Rate %			Average balance		Profit/(loss)			Rate %			Average balance			Profit/(loss)			Rate			Volume
	(€ thousands, except %)
Cash, central banks and credit institutions		42,117,993		1,476,738			3.51			53,538,412		208,485			0.39			(11,420,419	)		1,268,253			1,473,389			(205,136	)
Loans and advances to customers		153,978,221		5,839,767			3.79			157,870,419		3,965,858			2.51			(3,892,198	)		1,873,909			1,892,904			(18,995	)
Fixed-income portfolio		28,531,645		832,967			2.92			26,229,512		289,924			1.11			2,302,133			543,043			513,512			29,531

Subtotal		224,627,859		8,149,472			3.63			237,638,343		4,464,267			1.88			(13,010,484	)		3,685,205			3,879,805			(194,600	)
Equity portfolio		859,258		—			—			903,212		—			—			(43,954	)		—			—			—
Tangible and intangible assets		4,576,149		—			—			4,820,868		—			—			(244,719	)		—			—			—
Other assets		15,110,214		508,059			3.36			14,191,036		180,022			1.27			919,178			328,037			—			328,037

Total investment		245,173,480		8,657,531			3.53			257,553,459		4,644,289			1.80			(12,379,979	)		4,013,242			3,879,805			133,437
Central banks and credit institutions		31,484,501		(1,064,832	)		(3.38	)		48,310,994		8,713			0.02			(16,826,493	)		(1,073,545	)		(1,366,466	)		292,921
Customer deposits		160,564,046		(1,432,303	)		(0.89	)		162,393,140		(309,002	)		(0.19	)		(1,829,094	)		(1,123,301	)		(1,059,227	)		(64,074	)
Capital markets		26,379,723		(876,225	)		(3.32	)		22,304,397		(316,115	)		(1.42	)		4,075,326			(560,110	)		(452,311	)		(107,799	)

Subtotal		218,428,270		(3,373,360	)		(1.54	)		233,008,531		(616,404	)		(0.26	)		(14,580,261	)		(2,756,956	)		(2,878,004	)		121,048
Other liabilities		13,183,674		(560,954	)		(4.25	)		11,491,130		(229,160	)		(1.99	)		1,692,544			(331,794	)		—			(331,794	)
Own funds		13,561,536		—			—			13,053,798		—			—			507,738			—			—			—

Total funds		245,173,480		(3,934,314	)		(1.60	)		257,553,459		(845,564	)		(0.33	)		(12,379,979	)		(3,088,750	)		(2,878,004	)		(210,746	)

Average total assets		245,173,480		4,723,217			1.93			257,553,459		3,798,725			1.47			(12,379,979	)		924,492			1,001,801			(77,309	)

Financial income or expenses arising from the application of negative interest rates are recorded in line with the nature of the associated asset or liability. The credit institutions heading on the liabilities side includes negative interest rates applied to balances of credit institutions on the liabilities side, the most significant item being TLTRO III borrowing.

Gross Income

Net fees and commissions reached €1,386 million as at the end of 2023, representing a year-on-year reduction of 7.0%, which was mainly due to fewer service fees, as well as fewer asset management fees, particularly those charged on pension funds and insurance due to the change in the insurance product mix.

Gains/(losses) on financial assets and liabilities and exchange differences reached a total of €68 million, representing a reduction compared to the end of 2022, mainly due to reduced gains on trading derivatives.

Dividends received and earnings of companies consolidated under the equity method together amounted to €131 million, compared with €156 million in the previous year, as the latter included higher earnings from BSCapital investees.

Other operating income and expenses amounted to €(447) million, compared with €(337) million in 2022. This negative balance variation is mainly explained by the €(156) million paid for the new bank levy, booked in the first quarter of 2023, and by a larger contribution made to Banco Sabadell’s Deposit Guarantee Fund (€(132) million in 2023 compared to €(114) million in 2022), which was partially offset by the booking of a smaller contribution to the Single Resolution Fund (€(76) million in 2023 compared to €(100) million in 2022), given the reduction of the target calculated by the Single Resolution Board (SRB). It is also worth mentioning that 2022 was impacted by the recognition of €(57) million net, resulting from the agreement regarding the incidents that took place following the migration of TSB’s IT platform, which were partially offset with a tax-payable amount of €45 million (€32 million, net) due to insurance claim recoveries, with this item amounting to a total of €(25) million net, while in 2023, an additional €16 million of insurance claims were recognized.

Pre-provisions Income

Total costs stood at €3,015 million as at year-end 2023, impacted by €33 million of non-recurrent costs recorded in the fourth quarter related to TSB’s restructuring, which included €26 million of allocated provisions. Not including this impact, recurrent costs increased by 3.5% year-on-year due to both higher staff expenses and higher general expenses, particularly marketing and technology expenses, which offset the reduction of amortizations/redemptions.

The cost-to-income ratio for 2023 improved, standing at 42.6% compared to 44.9% in 2022.

Core results (net interest income + fees and commissions – recurrent costs) improved in the year, standing at €3,127 million as at 2023 year-end, having grown by 29.9% year-on-year as a result of the good evolution of net interest income.

Total provisions and impairments amounted to €(910) million as at the end of 2023, compared to €(1,032) million at the end of the previous year, representing a reduction of 11.8% thanks to fewer provisions for credit items, financial assets and real estate.

Capital gains on asset sales and other revenue amounted to €(46) million at the end of 2023. The year-on-year change is due to the recognition of higher IT asset write-offs.

Profit Attributable to the Group

After deducting corporation tax and minority interests, net profit attributable to the Group amounted to €1,332 million as at the end of 2023, representing strong year-on-year growth, mainly due to improved net interest income.

Banking Business Spain: 2023 versus 2022

The information in this subsection has been extracted from pages 89 and 90 of Banco Sabadell’s annual report as of and for the year ended December 31, 2023. The comparative financial information as of and for the year ended December 31, 2022 included in Banco Sabadell’s annual report as of and for the year ended December 31, 2023 (and included below) has been restated to take into account the implementation of IFRS 17 (please see Note 1.4 to the consolidated financial statements of Banco Sabadell as of and for the year ended December 31, 2023).

Net profit as at the end of 2023 amounted to €1,093 million, representing a year-on-year increase of 41.8%, mainly driven by the good evolution of net interest income.

Net interest income amounted to €3,353 million as of the end of 2023, growing by 34.2% year-on-year, due to higher loan yields and improved fixed-income revenue, underpinned by higher interest rates, which offset the higher costs of funds and capital markets.

Net fees and commissions stood at €1,247 million, 7.2% less than at year-end 2022, mainly due to the drop in service fees and asset management fees, particularly fees on pension funds and insurance due to the change in the insurance product mix.

Gains/(losses) on financial assets and liabilities and exchange differences amounted to €45 million, which represents a reduction in year-on-year terms, mainly due to trading derivatives.

Other income and expenses were mainly impacted by the €(156) million bank levy paid in 2023.

Total costs recorded a year-on-year increase of 4.2%, due to higher staff expenses, including salary management in the wake of inflationary pressures, and to the increase in general expenses, particularly marketing and technology expenses.

Provisions and impairments amounted to €816 million, down by 11.2% year-on-year, due to the booking of fewer provisions for both loan losses and financial assets, and also due to the impairment of real estate assets.


	2023			2022			Year-on-year change (%)
	(€ million, except %)
Net interest income		3,353			2,499			34
Fees and commissions, net		1,247			1,344			(7.2	)

Core revenue		4,601			3,843			19.7
differences		45			95			(52.8	)
Equity-accounted income and dividends		131			156			(15.7	)
Other operating income and expenses		(404	)		(225	)		79.7

Gross income		4,372			3,869			13.0
Operating expenses, depreciation and amortization		(1,965	)		(1,887	)		4.2

Pre-provisions income		2,407			1,982			21.5
Provisions and impairments		(816	)		(920	)		(11.3	)
Capital gains on asset sales and other revenue		(27	)		(9	)		198.1

Profit/(loss) before tax		1,564			1,053			48.5
Corporation tax		(469	)		(270	)		73.6
Profit or loss attributed to minority interests		1			11			(87.1	)

Profit attributable to the Group		1,093			772			41.7

Banking Business United Kingdom: 2023 versus 2022

The information in this subsection has been extracted from pages 122 and 123 of Banco Sabadell’s annual report as of and for the year ended December 31, 2023. The comparative financial information as of and for the year ended December 31, 2022 included in Banco Sabadell’s annual report as of and for the year ended December 31, 2023 (and included below) has been restated to take into account the implementation of IFRS 17 (please see Note 1.4 to the consolidated financial statements of Banco Sabadell as of and for the year ended December 31, 2023).

Net profit amounted to €195 million as at 2023 year-end, representing strong year-on-year growth, mainly on the strength of improved net interest income and reduced provisions. In addition, €16 million were recognized in 2023 for the collection of insurance compensation in connection with the IT migration, while 2022 included the recognition of €(57) million, net, derived from the migration related incidents.

Net interest income came to a total of €1,174 million, 2.0% more than in the previous year, mainly on the strength of a higher-yielding loan book due to higher interest rates and also due to the fixed-income portfolio, which offset the increased cost of funds and capital markets. At constant exchange rates, net interest income increased by 4.1%.

Net fees and commissions amounted to €124 million as at the end of 2023, representing a year-on-year reduction of 7.4%, due to a reduction in demand deposit fees. Total costs came to €(941) million, 3.5% higher year-on-year, impacted by the depreciation of the pound sterling. At constant exchange rates, costs increased by 5.6%, due to the booking of €(33) million of non-recurrent restructuring costs, the increase of recurrent costs being 1.9%, due both to higher staff expenses and to higher general expenses, mainly technology and marketing costs, which offset the reduction of amortizations/depreciations.

Provisions and impairments amounted to €75 million, falling by 278% year-on-year, mainly due to the reduced provisions for financial assets (conduct) in 2023.


	2023			2022			Year-on-year change (%)
	(€ million, except %)
Net interest income		1,174			1,151			2.0
Fees and commissions, net		124			134			(7.4	)

Core revenue		1,298			1,284			1.1
Gains or (-) losses on financial assets and liabilities and exchange differences		16			6			166.4
Equity-accounted income and dividends		—			—			—
Other operating income and expenses		(23	)		(95	)		(75.9	)

Gross income		1,291			1,195			8.0
Operating expenses, depreciation and amortization		(941	)		(909	)		3.6

Pre-provisions income		350			285			22.7
Provisions and impairments		(75	)		(104	)		(27.8	)
Capital gains on asset sales and other revenue		—			1			(113.2	)

Profit/(loss) before tax		274			182			50.8
Corporation tax		(80	)		(95	)		(16.2	)
Profit or loss attributed to minority interests		—			—			—

Profit attributable to the Group		195			87			123.9

The exchange rates applied to the income statement are GBP 0.8706 (average) in 2023 and 0.8532 (average) in 2022.

Banking Business Mexico: 2023 versus 2022

The information in this subsection has been extracted from pages 126 and 127 of Banco Sabadell’s annual report as of and for the year ended December 31, 2023. The comparative financial information as of and for the year ended December 31, 2022 included in Banco Sabadell’s annual report as of and for the year ended December 31, 2023 (and included below) has been restated to take into account the implementation of IFRS 17 (please see Note 1.4 to the consolidated financial statements of Banco Sabadell as of and for the year ended December 31, 2023).

Net profit as at 2023 year-end amounted to €44 million, representing year-on-year growth of 40.6%, supported by the appreciation of the Mexican peso. At constant exchange rates, this growth was 29.0%, mainly due to the good performance of net interest income.

Net interest income came to €196 million, growing by 31.2% year-on-year, or 19.0% at constant exchange rates, underpinned by higher yields on the loan book and higher revenue from fixed-income.

Net fees and commissions amounted to €15 million as at the end of 2023, increasing by €3 million compared to the previous year due to increased commercial activity. Total costs stood at €(108) million, representing growth of 25.8% compared to the previous year, affected by the appreciation of the Mexican peso. At constant exchange rates, costs increased by 14.1%, mainly due to higher general expenses, particularly marketing costs.

Provisions and impairments stood above the 2022 year-end figure, which included releases of several borrowers’ provisions.

Capital gains on asset sales and other revenue were more negative due to an increase in IT asset write-offs.


	2023			2022			Year-on-year change (%)
	(€ million, except %)
Net interest income		196			149			31.5
Fees and commissions, net		15			12			23.2

Core revenue		211			162			30.1
Gains or (-) losses on financial assets and liabilities and exchange differences		8			3			152.6
Equity-accounted income and dividends		—			—			—
Other operating income and expenses		(20	)		(17	)		—

Gross income		198			148			34.1
Operating expenses, depreciation and amortization		(108	)		(86	)		26.1

Pre-provisions income		90			62			45.1
Provisions and impairments		(19	)		(9	)		108.1
Capital gains on asset sales and other revenue		(19	)		(14	)		—

Profit/(loss) before tax		53			39			35.2
Corporation tax		(9	)		(8	)		9.4
Profit or loss attributed to minority interests		—			—			—

Profit attributable to the Group		44			31			41.8

2022 versus 2021

The information in this subsection has been extracted from pages 53 to 56 of Banco Sabadell’s annual report as of and for the year ended December 31, 2022.


	2022			2021			Year-on-year change (%)
	(€ million, except %)
Interest income		4,989			4,148			20.3
Interest expenses		(1,190	)		(722	)		64.8

Net interest income		3,799			3,425			10.9
Fees and commissions (net)		1,490			1,468			1.5

Core revenue		5,289			4,893			8.1
Gains or (-) losses on financial assets and liabilities and exchange differences		104			344			(69.9	)
Equity-accounted income and dividends		125			102			22.9
Other operating income and expenses		(337	)		(313	)		7.9

Gross income		5,180			5,026			3.1
Operating expenses		(2,337	)		(2,781	)		(15.9	)
Staff expenses		(1,392	)		(1,777	)		(21.7	)
Other general administrative expenses		(946	)		(1,004	)		(5.8	)
Depreciation and amortization		(545	)		(527	)		3.5
Total costs		(2,883	)		(3,307	)		(12.8	)
Memorandum item:
Recurrent costs		(2,883	)		(2,988	)		(3.5	)
Non-recurrent costs		—			(320	)		(100.0	)

Pre-provisions income		2,298			1,719			33.7
Provisions for loan losses		(825	)		(950	)		(13.2	)
Provisions for other financial assets		(111	)		(97	)		15.0
Other provisions and impairments		(96	)		(178	)		(46.1	)
Capital gains on asset sales and other revenue		(23	)		126			—

Profit/(loss) before tax		1,243			620			100.4
Corporation tax		(373	)		(81	)		359.2
Profit or loss attributed to minority interests		11			8			26.9

Profit attributable to the Group		859			530			61.9

The average exchange rate used for TSB’s income statement is 0.8532 (0.8594 in 2021).

Net Interest Income

Net interest income in 2022 amounted to €3,799 million, representing year-on-year growth of 10.9%, due to a higher-yielding loan book, improved fixed-income revenue, as well as strong growth of volumes, where it is particularly worth mentioning the growth of mortgages at TSB; all these facts served to offset the higher cost of capital markets.

Consequently, the net interest margin as a percentage of average total assets stood at 1.47% in 2022 (1.40% in 2021).

The breakdown of net interest income for the years 2022 and 2021, as well as the different components of total investment and funds, was as follows:


	2022								2021								Change						Effect
	Average balance		Profit/(loss)			Rate%			Average balance		Profit/(loss)			Rate%			Average balance			Profit/(loss)			Rate%			Volume			Days
	(€ thousands, except %)
Cash, central banks and credit institutions		53,538,412		208,485			0.39			48,693,390		(124,460	)		(0.26	)		4,845,022			332,945			333,136			(191	)		—
Loans and advances to customers		157,870,419		3,965,858			2.51			152,176,194		3,513,182			2.31			5,694,225			452,676			294,806			157,870			—
Fixed-income portfolio		26,229,512		289,924			1.11			24,991,737		154,224			0.62			1,237,775			135,700			122,946			12,754			—

Subtotal		237,638,343		4,464,267			1.88			225,861,321		3,542,946			1.57			11,777,022			921,321			750,888			170,433			—

Equity portfolio		903,212		—			—			1,044,020		—			—			(140,808	)		—			—			—			—
Property, plant and equipment and intangible assets		4,820,868		—			—			5,178,470		—			—			(357,602	)		—			—			—			—
Other assets		14,329,341		180,022			1.26			13,229,640		39,565			0.30			1,099,701			140,457			—			140,457			—

Total capital employed		257,691,764		4,644,289			1.80			245,313,451		3,582,511			1.46			12,378,313			1,061,778			750,888			310,890			—

Central banks and credit institutions		48,310,994		8,713			0.02			46,243,711		328,381			0.71			2,067,283			(319,668	)		(334,115	)		14,447			—
Customer deposits		162,393,140		(309,002	)		(0.19	)		154,609,681		(135,354	)		(0.09	)		7,783,459			(173,648	)		(139,206	)		(34,442	)		—
Capital markets		22,304,397		(316,115	)		(1.42	)		22,776,801		(265,876	)		(1.17	)		(472,404	)		(50,239	)		(46,445	)		(3,794	)		—

Subtotal		233,008,531		(616,404	)		(0.26	)		223,630,193		(72,849	)		(0.03	)		9,378,338			(543,555	)		(519,766	)		(23,789	)		—

Other liabilities		11,491,130		(229,160	)		(1.99	)		8,953,529		(84,206	)		(0.94	)		2,537,601			(144,954	)		—			(144,954	)		—
Own funds		13,192,103		—			—			12,729,729		—			—			462,374			—			—			—			—

Total funds		257,691,764		(845,564	)		(0.33	)		245,313,451		(157,055	)		(0.06	)		12,378,313			(688,509	)		(519,766	)		(168,743	)		—

Average total assets		257,691,764		3,798,725			1.47			245,313,451		3,425,456			1.40			12,378,313			373,269			231,122			142,147			—

Financial revenues or costs deriving from the application of negative interest rates are recognized as a function of the nature of the related asset or liability. The credit institutions line under liabilities refers to negative interest on the balance of liabilities with credit institutions, the most significant item being TLTRO III revenues.

Gross Income

Net fees and commissions amounted to €1,490 million as at the end of 2022, representing year-on-year growth of 1.5%, driven by service fees, where it is particularly worth mentioning the higher levels of card transactions and of banknote and foreign currency exchange, and also driven by fees related to risk transactions.

Gains/(losses) on financial assets and liabilities and exchange differences amounted to €104 million, while at the end of 2021 this item amounted to €344 million, as it mainly included €324 million of gains on sales from the amortized cost portfolio conducted to fund the second phase of the efficiency plan executed in Spain.

Dividends received and earnings of companies consolidated under the equity method together amounted to €125 million, compared with €102 million in 2021, after recognizing generally higher earnings from the insurance business.

Other operating income and expenses amounted to €(337) million, compared with €(313) million in 2021. Particularly worthy of note in this heading are the contributions to deposit guarantee schemes, amounting to €(129) million throughout the year (in line with the previous year), with Banco Sabadell’s individual contribution amounting to €(114) million, the contribution to the Single Resolution Fund of €(100) million (€(88) million in the previous year) and the payment corresponding to the tax on deposits of credit institutions (Impuesto sobre Depósitos de las Entidades de Crédito, IDEC) of €(35) million (€(33) million in the previous year). In addition, during this financial year it is worth noting the negative impact of €(57) million stemming from the fine received by TSB for the migration of its IT platform, which was partially offset with €45 million (gross) of insurance claims.

Pre-provisions Income

Total costs followed a positive trend, amounting to €2,883 million as at the end of 2022, representing a 12.8% reduction from the figure as at the end of 2021, which included €320 million of non-recurrent costs arising from the efficiency plans carried out in Spain and the United Kingdom. Not including this impact, recurrent costs fell by 3.5% year-on-year, driven by savings on staff expenses delivered by the efficiency plans and also by a reduction of general expenses.

The cost-to-income ratio stood at 45.1% in 2022, compared to 55.3% in 2021.

As at the end of 2022, core results (net interest income + fees and commissions – recurrent costs) amounted to €2,406 million, increasing by 26.3% year-on-year as a result of the steady growth of net interest income and fees and commissions, as well as the recorded reduction of costs.

Total provisions and impairments amounted to €1,032 million as at the end of 2022, compared to €1,225 million at the end of the previous year, representing a year-on-year reduction of 15.7% thanks to fewer credit provisions and the reduction of real estate provisions.

Gains on asset sales and other revenue amounted to €(23) million as at the end of 2022. The change from the end of the previous year is due to the fact that the previous year mainly included €83 million (gross) from the sale of the depository business and €42 million (gross) from the sale of the BanSabadell Renting business.

Profit Attributable to the Group

After deducting corporation tax and minority interests, net profit attributable to the Group amounted to €859 million as at the end of 2022, representing a year-on-year increase of 61.9% that is mainly the result of improved core revenue, cost savings and the booking of fewer provisions.

Banking Business Spain: 2022 versus 2021

The information in this subsection has been extracted from page 67 of Banco Sabadell’s annual report as of and for the year ended December 31, 2022.

Net profit as at the end of 2022 amounted to €740 million, representing sharp year-on-year growth, mainly as a result of the good performance of net interest income, the reduction of costs, and the booking of fewer provisions.

Net interest income amounted to €2,499 million as at 2022 year-end, growing by 8.6% year-on-year due to higher loan book yields, in turn supported by higher interest rates, the increased contribution of the ALCO portfolio and the good progression of volumes, which all served to offset higher costs in capital markets.

Net fees and commissions amounted to €1,344 million, 0.6% higher than at the end of 2021, due to the increase in service fees, on which topic it is particularly worth mentioning the increases in payment card usage and in the exchange of banknotes and foreign currency, and also due to the increased fees received on risk transactions.

Gains/(losses) on financial assets and liabilities and exchange differences amounted to €95 million, a reduction compared to the previous year, which included €323 million gained on sales from the ALCO portfolio (at amortized cost) executed to fund the second phase of the efficiency plan.

Equity-accounted results and dividends showed year-on-year growth of 22.5% due mainly to the increased contribution of the insurance business.

Other income and expenses were positively impacted by the insurance claim recoveries associated with TSB’s IT migration.

Total costs fell by 17.1% year-on-year, as the previous year included €301 million of non-recurrent costs related to the efficiency plan carried out. Not including this impact, costs decreased by 4.5% due to both lower staff expenses as a result of the cost savings delivered by the efficiency plans, and due to the recognition of lower general expenses.

Provisions and impairments amounted to €(920) million, down by 22.9% year-on-year, due to the booking of fewer provisions for both loan losses and real estate assets.

Gains on asset sales and other revenue showed a year-on-year reduction, as the previous year mainly included €83 million (gross) from the sale of the depository business and €42 million (gross) from the sale of the BanSabadell Renting business.


	2022			2021			Year-on-year change (%)
	(€ million, except %)
Net interest income		2,499			2,302			8.6
Fees and commissions (net)		1,344			1,336			0.6

Core revenue		3,843			3,638			5.6
Gains or (-) losses on financial assets and liabilities and exchange differences		95			342			(72.3	)
Equity-accounted income and dividends		125			102			22.9
Other operating income and expenses		(225	)		(269	)		(16.6	)