Banking in Spain: from Bilbao's hostile takeover bid to an independent Banesto

BarcelonaIf it goes ahead, BBVA's takeover of Banco Sabadell will not only be the largest banking merger in Spain after CaixaBank's takeover of Bankia in 2021, but also the first hostile takeover of the century in a sector where mergers are usually negotiated and supported by the government and the Bank of Spain. The last precedent for a hostile takeover was that of the former Banco de Bilbao (now BBVA) in Banesto in 1987, which failed.

In the consolidation process since Spain's entry into the former European Economic Community in 1986, there is also a precedent for a takeover without a merger, such as the condition imposed by the Spanish government on BBVA for a minimum of three years. Santander did this with Banesto for almost 20 years, when what usually happens is that the absorbed brand disappears immediately.

Under pressure to gain competitiveness in 1987, José Ángel Sánchez Asiaín, president of Banco de Bilbao, one of the then members of the so-called Big Seven, caused a stir in the previously placid Spanish banking landscape by launching an offer for Banesto. The fourth-largest bank (Bilbao) was attempting to take control of the second-largest (Banesto). This offensive had the backing of the Bank of Spain, headed by Mariano Rubio, and the Socialist government of Felipe González, whose Minister of Economy was Carlos Solchaga. The essential idea was to improve the management of Banesto, which was dominated by the economic elites led by Pablo Garnica, who were defending themselves tooth and nail. Banco de Bilbao's offer to Banesto shareholders, based on a share exchange, represented a 40% premium.

In the midst of the battle, José María López de Letona unexpectedly resigned as Vice Chairman and CEO of Banesto. But two days later, Mario Conde, an emerging state lawyer who had joined the bank two months earlier after purchasing a majority stake in shares with Juan Abelló thanks to the sale of antibiotics to the Italian company Montedison, burst onto the scene and became Vice Chairman. On November 29, Bilbao, after failing in negotiations, launched its takeover bid to attract shareholders. The following day, Conde became Chairman of Banesto, aiming to stop the operation. And he succeeded: on December 5, a week after launching the takeover bid, Bilbao withdrew. From then on, Mario Conde's golden period at the helm of Banesto began, which abruptly ended with one of the largest bank takeovers in Spain in December 1993.

In addition to opposition from Banesto's management, the Bilbao operation also met with rejection. Furthermore, Bilbao did not have a significant stake in Banesto, which would have helped it pull off the deal. However, once the attempt was abandoned, Bilbao continued its pursuit of growth, and the following year, in 1988, it agreed to merge with the former Banco Vizcaya, then chaired by Pedro Toledo. The outlook was no longer so rosy because in 1989, Santander, then the smallest of the major banks, broke the bond.status quo by the hand of its president Emilio Botín when launching the call super account, which introduced real competition into the sector.

Banesto, for its part, ended up in the hands of the Deposit Guarantee Fund in 1993, with a capital deficit of more than €3.6 billion and with Mario Conde in prison. It eventually became the property of Santander, which appointed Alfredo Sáenz, vice president of the then BBV and responsible for the rescue of Banca Catalana, which in 1984 was transferred to the former Banco Vizcaya. He maintained the brand and management autonomy of Banesto until 2012, eighteen years after having held the majority of the capital, while the market was still much more fragmented than it is today.

The financial crisis that erupted in 2008 wiped the ten savings banks that existed in Catalonia and the rest of Spain off the financial sector map, with the exception of those in Pollença and Ontinyent. Some were converted into foundations, while others were swallowed up by banks. BBVA integrated six banks in Catalonia. On the one hand, those that formed Unnim (Sabadell, Terrassa, and Manlleu), and on the other, those of Catalunya Caixa (Catalonia, Manresa, and Tarragona). The other four savings banks were absorbed by CaixaBank (Caixa Girona, Laietana, which came from Bankia, Penedès, and Sabadell, although the latter remained in the branch network in Catalonia).

After this stage, the largest integration so far this century, also amicable, took place four years ago. In 2021, in a rush to avoid Bankia's collapse, the transaction was closed through which the former savings bank, converted into a foundation and owner of a company, Criteria, which holds the largest portfolio of business holdings in Spain, led the absorption of the entity that emerged from the former Caja Madrid.

Since the 1980s, the sector has grown from seven large groups (Bilbao, Vizcaya, Hispanoamericano, Central, Banesto, Santander, and Popular) to four, with some new entrants, such as CaixaBank, to which Santander, BBVA, and Sabadell have been added. Hispano, which had previously merged with Central, joined Santander in 1999, which also included Popular in 2017; while BBVA integrated the public group Argentaria (the In of the logo) in 1999. Always with friendly operations.