MADRID (Reuters) - Sabadell Chief Executive Cesar Gonzalez-Bueno expects BBVA to submit a higher offer for his bank, he said on Tuesday, adding that its Spanish competitor's hostile takeover bid undervalues the lender.

His comments came after BBVA on Monday formally launched its around 14.9-billion euro ($17.5 billion) takeover for Sabadell, with some analysts expecting it will have to raise its offer as shares in its smaller rival have surged above the original price.

"This offer is most probably not the last one, because everybody agrees that this offer lacks merits," Gonzalez-Bueno told a financial event hosted by Barclays.

BBVA said on Friday it was not planning to change the offer.

Gonzalez-Bueno said that the board already rejected an offer 16 months ago, but did not say what the board might decide in coming days. Sabadell's board has 10 working days from September 8 to issue a formal opinion on the bid.

Gonzalez-Bueno also said that BBVA's assumptions on the new cost-saving target of 900 million euros in 2029 rather than 850 million in 2028 were over-optimistic after the Spanish government blocked a full merger of the two banks for at least three years. 

Sabadell shareholders will have until October 7 to tender their shares, with the results of the offer expected by October 14. 

($1 = 0.8518 euros)

(Reporting by Jesús Aguado; additional reporting by Emma Pinedo, editing by Inti Landauro and Emelia Sithole-Matarise)