Headcount reductions involve large restructuring charges, which then eat into capital, Creelan-Sandford said. A potential deal with a bank such as BBVA, which itself has low solvency levels, could require a capital increase, reducing the value for shareholders, he said. Bankia's strong capital ratio of 13.27%, the highest of Spanish banks, is a positive for its deal with CaixaBank, Creelan-Sandford said. However, by itself, Sabadell faces continued pressure on its preprovision profits and revenues, he said. A large proportion of the bank's lending goes to small and medium-sized enterprises and corporates, a potential risk for asset quality as concerns about rising bad loans grow, he said. Corporates and SMEs accounted for 42% of the group's performing loans, according to the bank's second-quarter earnings presentation. Mortgages make up 45% of its performing loan book and the rest is consumer and public lending.