BBVA CEO Carlos Torres Vila speaks during the opening of the annual meeting of Regional Advisors of BBVA Bancomer, in Mexico City
BBVA CEO Carlos Torres Vila speaks during the opening of the annual meeting of Regional Advisors of BBVA Bancomer, in Mexico City, Mexico June 11, 2019. Reuters

A traditional banking consolidation in Europe is unlikely right now due to a lack of progress regarding the banking union, BBVA Chairman Carlos Torres said on Tuesday.

"It is difficult to see cross-border mergers because of the lack of functioning of the banking union, which is half done," Torres told a financial event on Tuesday.

He added it was "very frustrating" to see the banking union not progressing, which was essential for more efficient allocation of resources and investment.

In this context, BBVA's chairman said it was easier to pursue growth strategies through the implementation and deployment of digital banking models such as the one undertaking by the Spanish lender in Italy.

Plans for a banking union were launched in 2012 to create a single system for regulating top euro zone lenders to ensure taxpayers were no longer on the hook for rescuing failing lenders, as they were during the global financial crisis.

Regarding traditional consolidation, Torres said it was a an issue that "we do not spend much time on, except when there is obviously an opportunity (...) but that happens very sporadically."

Comments from Torres came after BBVA's Chief Executive Officer Onur Genc last week said that further consolidation in the financial sector was important in an industry where scale was "critical".

In 2020, BBVA called off merger talks with smaller Spanish rival Sabadell though the deal has always been viewed by the market as an option given BBVA's solid solvency buffers.