Spanish bank BBVA said today that Britain's Prudential Regulation Authority has approved it taking indirect control of Sabadell's TSB.
BBVA said the authorisation is one of the approvals BBVA has to secure for its more than €12 billion bid for Sabadell, since the British bank would become part of BBVA.
Sabadell rejected BBVA's all-share offer in May, prompting Spain's second-largest bank to go hostile in a second attempt to buy the country's fourth-largest lender after a failed 2020 bid.
BBVA has since received a green light from authorities in several countries where Sabadell has a presence, the US, France, Portugal and Morocco.
The acquisition, which the Spanish government opposes, also requires the authorisation from the European Central Bank, Spain's stock market supervisor and also its antitrust watchdog.
BBVA is offering one newly issued share for 4.83 Sabadell shares, a premium of 30% over the target's April 29 close.
As BBVA shares have fallen to €9.5580 from €10.90 since the offer was made, the premium is now around 2%, valuing Sabadell at some €10.8 billion, Reuters calculations show.
Combining the two would create a bank with more than €1 trillion in total assets and mark the latest consolidation in the Spanish banking industry.
BBVA, which had set itself a minimum approval threshold of 50.01% of Sabadell shares, said in May that the process could take six to eight months before formally going to shareholders.
