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BBVA says all options on table, including withdrawal or

appeal

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Sabadell weighs options for potential sale of TSB

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Santander among suitors for TSB, sources say

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Citi does not see Madrid's conditions preventing BBVA bid

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BBVA is analysing impact on cost savings

(Adds Sabadell CEO comments in paragraphs 6 to 11)

By Jesús Aguado

SANTANDER, Spain, June 25 (Reuters) - Spain's BBVA

will decide shortly whether to move ahead with its

hostile bid for Sabadell after reassessing cost

savings in light of conditions imposed by the Spanish

government, the bank's manager for Spain said on Wednesday.

The government said on Tuesday BBVA would not be allowed to

integrate its operations with Sabadell for up to five years as

one of the conditions imposed on its roughly 14 billion-euro

($16 billion) bid.

"We'll decide on the additional condition shortly (...)

We're in no way keen to delay this process," BBVA executive Peio

Belausteguigoitia said.

He added that all options remained on the table - including

withdrawing the offer and a potential appeal against the

government's verdict.

In the latest twist, Sabadell said last week it had received

expressions of interest in its British unit, TSB, which analysts

say could be a defensive move to ward off BBVA.

On Wednesday, Sabadell's Chief Executive Officer Cesar

Gonzalez-Bueno said the bank would sell TSB if it created value

for shareholders. He added that if by then BBVA's offer was

still on the table, Sabadell would need shareholders' approval.

Gonzalez-Bueno added Sabadell would only sell TSB if the

price was "above market estimates" and that any sale was

independent of BBVA's bid.

In 2015, Sabadell bought TSB for 1.7 billion pounds

($2.3 billion). At the end of 2024, TSB had a total equity value

of 2.12 billion pounds.

Gonzalez-Bueno said a decision whether to sell TSB would be

taken before July 24. He did not give any details about the

approaches, but said he did not expect any more.

Santander is among the potential bidders, two

people with knowledge of the matter said.

Santander declined to comment. Other potential bidders

include Barclays ( BCS ), Bloomberg reported. Barclays ( BCS ) declined

to comment.

COST SAVINGS TARGET IN DOUBT?

So far, BBVA has signalled that if it kept Sabadell separate

it would still be able to generate most of the expected 850

million euros in cost synergies over two years after completing

the deal.

Under Spanish law, the government cannot stop BBVA from

buying Sabadell shares, but it has the final word on whether a

merger goes ahead. That has raised the possibility BBVA could

end up with a majority stake without an outright merger,

jeopardising expected synergies.

"Most of the synergies will come from the IT area and we are

now analysing the decision from the government,"

Belausteguigoitia said.

The government has said that neither bank could reduce staff

or close branches in the event of a merger.

At 1444 GMT, BBVA's shares were down 2.7%, and Sabadell's

down 2%.

Citi said in a note that it did not expect the government's

decision to prevent BBVA from launching a tender offer.

Sabadell's CEO said that the "lower the synergies BBVA can

extract from the deal, the less room it has to sweeten the

offer," while adding that the chances of BBVA's bid succeeding

had diminished since the government's decision was announced.

($1 = 0.8618 euros)

($1 = 0.7346 pounds)