The European Central Bank has authorised BBVA's offer for Sabadell part of the regulatory process for the Spanish bank's hostile bid for its smaller rival.
The acquisition, which the Spanish government opposes, must also be authorised by Spain's stock market supervisor and its antitrust watchdog CNMC.
"We expect to receive the remaining authorisations within our estimated timeframe and move forward with the most attractive project in European banking," BBVA Chairman Carlos Torres said.
Sabadell rejected BBVA's all-share offer in May, prompting Spain's second-biggest lender by market value to go hostile in another attempt to buy its rival after a failed bid in 2020.
BBVA has since received the green light for the deal from authorities in several countries where Sabadell has a presence, such as Britain, the US, France, Portugal and Morocco.
A spokesperson for Sabadell, Spain's fourth-largest lender, said it was expected that the ECB would give its authorisation.
"This remains a long and complex process, and Sabadell shareholders do not need to make any decisions now," the person said.
BBVA is offering one newly issued share for 4.83 Sabadell shares, which had represented a premium of 30% over the target's April 29 close.
As BBVA shares have fallen to €9.0160 from €10.90 since the offer was made, the premium is now around 2%, valuing Sabadell at about €10.3 billion, Reuters calculations show.
Combining the two would create a bank with more than €1 trillion in total assets.
BBVA, which has 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.
