BBVA's takeover bid for Sabadell: from perpetual merger to temporary fission

In the world of physics, nuclear fission is the reaction in which the nucleus of a heavy atom, upon capturing an incident neutron, splits into two or more nuclei of lighter atoms. The nucleus that captures the incident neutron becomes unstable and, as a result, splits into lighter fragments, leading to a situation of greater stability. BBVA's objective when launching its takeover bid for Banc Sabadell in May of last year was not to keep the two parties separate, even temporarily. Instead of fission, it was pursuing a merger, increasing its business presence in more stable regions with greater legal certainty, such as Spain and, if the possible sale is not completed, the United Kingdom through TSB, which Sabadell brought in through its merger. A perpetual initiative that completely changes the banking landscape.

But the Spanish government, which has closed the transaction analysis process, is complicating matters by imposing at least three years of independent legal entities, assets, and management, which could last up to five years. The ball is now in BBVA's court. Although it could maintain its objective of business diversification, other goals, such as achieving savings from the merger of the two banks, would be complicated.

If Sabadell has reacted by strengthening its intention to continue alone and demanding more information from the Basque bank so its shareholders can decide, BBVA should surely reconsider and assess the consequences of the conditions imposed. Unlike those imposed by the National Commission on Markets and Competition (CNMC), these are issues that address the general interest, from worker protection to territorial cohesion. These variables seem much closer to the interests not only of SMEs but of customers in general, given the risk of strengthening a banking oligopoly, especially in Catalonia but also in the Valencian Community, the Balearic Islands, and Asturias.

Foment del Treball was one of the first to react. The Catalan employers' association considers the takeover bid "depreciated" because, in its view, it loses all interest for shareholders. Ultimately, it's up to them to decide whether they are interested in joining a bank with a very different model from Sabadell's roots in the region, one that is much more global and has interests in Mexico and Turkey. Furthermore, at a price below its value, they are considering the Catalan bank.

The fact is that the operation has met with opposition from the Catalan and Spanish governments, from most political parties and the Catalan economic community, from Fomento to Pimec, from Cecot to the Círculo de Economía, the unions, the chambers of commerce, Fira de Barcelona, ​​​​the RACC, FemCat, the College of Economists, and Barcelona Global. Whether out of conviction or as a defense against the takeover bid, a few months ago Sabadell returned its headquarters to the city where it was born more than a hundred years ago, and Catalonia needs strong entities and companies. That's why the satisfaction of the president of the Generalitat, Salvador Illa. Only with a solid business and financial ecosystem and other measures to become more than just a tourism powerhouse, but also an economic powerhouse, will Catalonia achieve the leadership it seeks.