Banco Sabadell: 30 momentous days in a 144-year history

BarcelonaBanco Sabadell is experiencing what could be the most momentous thirty days in its 144-year history. It is in the hands of its shareholders –The acceptance period for BBVA's takeover bid is from this Monday until October 7th. deciding the future of a bank that was founded in the co-capital of Vallès Occidental in 1881, driven by a group of businessmen who instilled in it the vocation of banking for SMEs and companies.

This decision will determine whether or not Catalonia will again be left without the main headquarters of any of the major Spanish financial institutions. Furthermore, staffing adjustments are planned, as BBVA acknowledges in the takeover bid prospectus, approved by the National Securities Market Commission (CNMV), the last remaining step in this operation initiated almost a year and a half ago.

When the three-year ban on a merger, imposed by the Spanish government, is up, "staff adjustments are planned for both entities." However, they assure us, "the principles of professional competence and merit will be respected in any case." And the objective, without yet providing figures, is to prioritize "voluntary departures and relocations as much as possible."

This takeover bid, which BBVA already attempted in 2020 without backing out, was announced three days before last year's Catalan regional elections and has met with opposition from the Spanish and Catalan governments. and also of the different business and economic organizations from the first dayThe main fear is that the banking offer is reduced (less staff, fewer offices), than the National Commission of Markets and Competition (CNMC) It is believed to be preserved with a series of temporary commitments acquired by BBVACritics and Pedro Sánchez's administration don't see it that way, as they, after holding an unprecedented public consultation, prohibited a merger of the two banks for at least the first three years for reasons of "public interest."

And this led to a Brussels file and the transfer of the takeover bid to the judicial field with an appeal by BBVA to the Supreme CourtThe fact is that, if the takeover bid is successful, a bank with strong roots in Catalonia would be lost, and the number of major banks on offer would be reduced from four (CaixaBank, Santander, BBVA, and Sabadell) to three. Furthermore, as revealed by data from the European Central Bank (ECB), which advocates cross-border mergers, Spain is one of the major EU countries with the highest banking concentration..

In the midst of all this, shareholders, many of them customers, must decide whether or not to accept the takeover bid launched by BBVA. The Basque bank maintains that it will not improve its offer, although since January, Sabadell shareholders would earn more by selling shares on the market than by participating in the takeover bid. Furthermore, The personal income tax bill could be expensive for them..

These will be days of uncertainty regarding the degree of acceptance. BBVA insists that the threshold it has set for success is at least 50.01% of the voting rights. However, it has included in the takeover bid prospectus the possibility of settling for 30% or less than 50%, which would require it to launch an all-cash takeover bid, as required by law. BBVA Chairman Carlos Torres stated on Friday that the goal is to have "control" and that the 30% possibility is just one of the scenarios included for legal reasons. Ultimately, it is an open door to control should participation decline.

In any case, whether the project prospers or not now rests entirely in the hands of the approximately 200,000 small shareholders, who account for around 40% of the capital. These are joined by numerous institutional investors, who can tip the balance. At the forefront is the large American investment management firm BlackRock, which is also BBVA's largest shareholder. And new institutional shareholders continue to enter and increase their stake, such as the French group BNP Paribas, which has reached 1.114%.

Behind BlackRock with 7.024% are the insurance company Zurich (4.700%), the Mexican investor and businessman David Martínez (3.495%), Dimensional Fund Advisors (2.873%), UBS (2.811%), Norges Bank (2.177%), Goldman (1.338%), Amundi (1.271%), DWS (1.212%), Qube (1.021%) and JP Morgan Chase (1.009%). In addition to BNP Paribas.

One of BBVA's objectives, which aims to be a global bank, is to reduce its exposure to Mexico and, in particular, Turkey. With the merger, the bank would gain ground in Spain and also planned to do so in the United Kingdom. but the sale of the Sabadell TSB subsidiary Santander is prevented from doing so, although BBVA downplays it.

Sabadell, for its part, wants to focus on the Spanish market, with a territorial vision. In recent years, it has grown through mergers with NatWest Spain, renamed Solbank, Banco Herrero, Atlántico, Urquijo, Guipuzcoano, CAM, Banco Gallego, the branch network in Catalonia and Aragon of the former Caixa Penedès, and Lloyds' business in Spain, as well as TransAitlantic Mexico. As alternatives to BBVA, options such as a merger with mid-sized banks such as Unicaja or Abanca have not come to fruition, and the possibility of a foreign bank making a counter-bid does not seem easy at the moment, according to analysts.

For BBVA, with its ambition to be a global bank, this operation would allow it to establish deeper roots in Catalonia. It retained six of the former Catalan savings banks: Unnim (Manlleu, Sabadell, and Terrassa) and CatalunyaCaixa (Catalonia, Manresa, and Tarragona). But the process goes way back, with Banca Mas Sardà, absorbed by Banco Bilbao (now BBVA) and Banca Catalana, part of the former Banco de Vizcaya (now also BBVA). In Bilbao and Vizcaya, merged in 1988 (BBV), the public group Argentaria joined in 1999 (BBVA). The bank assures that if the takeover bid doesn't go through, "nothing will happen," because it's "a great bank," according to Torres.