Sánchez and TSB tighten the takeover bid for Banc Sabadell

MadridThere are two issues straining BBVA's hostile takeover bid for Banc Sabadell. One is set to be resolved this Tuesday: the Spanish government's decision to impose more conditions on the transaction. The second, Sabadell's sale of its British subsidiary TSB, has no resolution date on the table, although sources consulted by ARA assure that work is underway. Despite the disagreement over the timeline, all eyes are on both issues.

This Tuesday we will know to what extent Pedro Sánchez is making moves regarding a takeover bid that, from the outset, has generated suspicion in the Spanish government. The Council of Ministers will impose additional conditions beyond those governing Competition for reasons of public interest. The unknown is their scope: whether they are temporary or structural conditions, or what areas they would affect (labor, territorial cohesion, etc.). For example, the Ministry of Labor has demanded a "ban on dismissing workers."

Economy Minister Carlos Cuerpo will announce this at a press conference after the Cabinet meeting, so the meeting will not wait until the market closes. The affected entities, as well as the Spanish stock market regulator, the National Securities Market Commission (CNMV), were more likely to announce the Cabinet meeting's decision after the market closes, that is, after 5:30 p.m. The CNMV itself is considering briefly suspending trading in both banks if the Spanish government's explanation significantly impacts the stock market. This Monday, amid the escalating war in the Middle East and with all the focus on the price of crude oil, BBVA closed the day at €12.79 per share (0.93% less than last Friday), while Sabadell closed at €2.69, down 1.10%.

The government could also accept the Competition Authority's ruling and, therefore, its terms, or even water it down, although no one is considering these scenarios given its rejection of the takeover bid. However, in BBVA's opinion, the Competition Act only allows the central government to do the latter two things. In fact, there is optimism at the Bilbao bank: "I'm not worried [about what the Spanish government might decide]," said the bank's chairman, Carlos Torres, on Monday.

The TSB letter

The other issue putting pressure on the takeover bid is Sabadell's possible sale of its British subsidiary, TSB, which represents 17% of its business. Getting rid of this asset would, de facto, mean a slimming down of the bank, which would also create a different scenario for BBVA, which this Monday reiterated that it has the option to back out if this move disrupts its plans (mainly the value creation that could result from the transaction). So far, the only information that has emerged is the Vallesano side's confirmation of the analysis of the offers it has received. has assured the entity chaired by Josep Oliu.

However, the bank must proceed cautiously regarding its duty of passivity (not to do anything extraordinary that could derail the success of the transaction), something the CNMV is already investigating. The Spanish stock market regulator has not detected a breach of this duty "so far," although it has not yet reached final conclusions, and such a decision would have to be submitted to the general shareholders' meeting.