BBVA buys a US bank for $9.6bn

Compass Bank has branches across the southern US states

Spain's BBVA has agreed to buy US bank Compass Bancshares for $9.6bn (£4.9bn).

BBVA shares closed 0.5% lower on concern that it might be paying too much, offering a 16% premium over the average share price for the last 10 days.

Compass Bancshares runs more than 400 branches of Compass Bank in the states of Alabama, Arizona, Colorado, Florida, New Mexico and Texas.

One of the top 30 banks in the US, in 2006 it reported profits up 15% to a

record $460m.

BBVA will sell its 5% stake in the Spanish utility Iberdrola and issue 3.9 billion euros ($5.1bn; £2.6bn) of new shares to help fund the acquisition.

The offer is a combination of cash and new BBVA shares.

BBVA has been trying to break into the US market for some time and last year bought banks in Texas to take advantage of cross-border money flows with Mexico, where it owns the biggest lender.

Its attempts to expand in Europe ran into a roadblock in 2005 when its attempt to buy Italy's Banca Nazionale del Lavoro (BNL) was blocked by the Italian government.