The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Liam Proud

LONDON, Oct 17 (Reuters Breakingviews) - Investors in Spain's 96 billion euro BBVA BBVA.MC can breathe a sigh of relief. Carlos Torres's planned 16 billion euro acquisition of rival Banco de Sabadell SABE.MC, which looked likely to be a messy saga, has ended. The chair's credibility is dented, particularly in relation to future deals. But he still has a good enough track record to stay in his job.

BBVA's shares popped 6% on Friday morning after the Spanish stock market regulator said late on Thursday that just 25% of Sabadell's shares tendered, consigning the equity-based offer to failure. The share-price pop is small consolation for Torres, whose judgment in relation to the long-running saga looks questionable.

Start with the price. Sabadell's improving performance since the April 2024 bid eroded the initial premium on offer. Torres and BBVA never fully seemed to grasp that point. The bidder offered a modest bump in late September, which was partly eaten up by a fall in its own stock. Sabadell's shares on Friday morning fell by just 4 percentage points more than the average of Spanish rivals Banco Santander SAN.MC, CaixaBank CABK.MC and Bankinter BKT.MC. That undermines Torres's recent claims that he was offering a 30% control premium, suggesting instead that fair value was relatively close to the bid price.

It's also questionable whether BBVA was right to press on with the deal amid government opposition, given the politically sensitive nature of banks. Even the uber-aggressive UniCredit CRDI.MI CEO Andrea Orcel relented after concluding that the Italian and German states were set against his Banco BPM BAMI.MI and Commerzbank CBKG.DE pursuits respectively. Another point is that navigating such political problems, and getting governments on side, is part of the job of being a bank chair.

Torres on Friday said that he was staying put despite the failure. One argument for him leaving is that it may now be harder for him to put future acquisition ideas to shareholders.

Stepping down would be too extreme, however. First, BBVA's core performance hasn't suffered because of the Sabadell saga. Analysts reckon the bank is on track for a 19% return on tangible equity in 2025, 2026 and 2027. That's streets ahead of the mid-teens level for peers, and in the same ballpark as JPMorgan JPM.N. Torres also has a compelling growth story to tell, given his presence in racier emerging markets at a time when rates are falling in the U.S. and Europe.

Longer-term performance also looks good. BBVA's shares are up 625% over the past five years, compared with 430% for Santander. As such, Torres has enough credit in the bank to stay.

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CONTEXT NEWS

Just 25% of Banco de Sabadell shares tendered into rival BBVA's equity-based offer, the Spanish stock market regulator said on October 16.

(Editing by George Hay; Production by Streisand Neto)

((For previous columns by the author, Reuters customers can click on PROUD/liam.proud@thomsonreuters.com))