Spain's BBVA on Tuesday asked the European Central Bank to authorize its hostile bid of more than 12 billion euros ($13 billion) for Sabadell, a source close to BBVA said.

BBVA's all-share offer was rejected by Sabadell last month, prompting Spain's second-largest bank to adopt a hostile stance in its new bid to buy its smaller rival, which is the country's fourth-largest bank and also owns Britain's TSB.

"With this application, BBVA has completed all applications for clearance, including from the U.K. Prudential Regulation Authority," the source told Reuters.

The combination of the two banks, following a failed attempt in 2020, would create a financial institution with more than €1 trillion in total assets and would be a new milestone in the corporate concentration of Spanish banking.

Spain's competition watchdog said on Tuesday that BBVA had sought approval for the Sabadell deal, which the Spanish government has said it opposes.

Last month, BBVA asked stock market supervisor CNMV to authorize its offer of one newly issued share for every 4.83 Sabadell shares, a 30% premium over closing prices on April 29.

Given that BBVA shares have fallen from €10.90 to €9.4560 since the offer was announced, the offer premium is now just over 5%, valuing Sabadell at around €10.65 billion, according to Reuters calculations.

BBVA, which had set itself a minimum approval threshold of 50.01% of Sabadell shares, has said the process could take six to eight months before formally going to shareholders.

Under Spanish law, the government cannot stop the process, but has the final say on whether to allow a merger.

($1 = 0.9181 euros)

(Reporting by Jesús Aguado; additional reporting by Inti Landauro in Madrid; editing by Tommy Reggiori Wilkes and Alexander Smith; Spanish edition by Tomás Cobos) ((Inti.Landauro@thomsonreuters.com)