(Bloomberg) -- BBVA SA’s investors voted to support the lender’s bid for rival Banco Sabadell SA, allowing Chairman Carlos Torres to clear one hurdle in his attempt to create a domestic banking giant.

The motion to increase capital by issuing new shares — a necessary step in the process — was adopted by 96% of the investors during an extraordinary shareholder meeting in Bilbao, Spain on Friday. 

The yes vote “marks a very important milestone to move ahead with the most attractive project in European banking,” Torres said at the meeting.

The investor backing is just one of many hoops BBVA needs to jump through as it pursues Sabadell in a hostile takeover. Torres made the approach two months ago in a move that would shake up Spanish banking by creating a new entity with more than €1 trillion ($1.1 trillion) in assets.

As a next step after the investor vote, BBVA now needs approval for the offer from various domestic and international regulators including the European Central Bank. It ultimately seeks acceptance of its offer by shareholders representing at least 50.01% of Sabadell’s capital stock.

Sabadell’s leadership has rejected the approach as undervaluing the firm. It has also said that the offer from BBVA underestimates the associated costs and the capital hit.

Sabadell Chairman Josep Oliu said in a letter to the lender’s shareholders on Thursday that “there is still a long way to go” before they will be asked to decide if they want to trade in their shares. The acceptance period is unlikely to start before the end of 2024 given “the complexity of the ongoing regulatory procedures,” he said.

The Spanish government has said it’s opposed to the deal too. It’s concern is that the acquisition would further crimp competition in a banking market that’s already dominated by a handful of banks.

BBVA, whose official name is Banco Bilbao Vizcaya Argentaria SA, is offering one newly issued share for every 4.83 Sabadell shares. At the time the offer was made, that ratio implied a valuation of €11.5 billion for the smaller bank.

The final amount of the capital increase will depend on the number of Sabadell shareholders who take up the offer, BBVA has said.

--With assistance from Levin Stamm.

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