Misc 18/11/2020

BBVA - Sabadell bank fusion process: clues to an operation which will be "bad for Catalonia"

Banco Sabadell, the most coveted piece in the banking scenery, faces a painful absorption

Albert Martín
3 min
BBVA - Sabadell: claus d’una operació “dolenta per a Catalunya”

BarcelonaThe more than 6,000 workers that Banco Sabadell has in Catalonia, and some of the more than 5,000 that BBVA has, experienced a hard working day yesterday. The announcement of the merge negotiations between the two institutions opens up a clear labour scenario: workers for identical functions will double, and therefore, there will be cuts.

Bank mergers are made in order to add both entities' clients, and manage them with only a part of the staff - which entails cutting back on workers. "[There is] No industrial sense, nor anything like that, that's Esade nonsense", a veteran banker told ARA yesterday. "The market only buys the deals that lead to a lot of job losses, and that's what's going to happen", he added. And unfortunately, between BBVA (which has 606 branches in Catalonia) and Sabadell (which has 478), they have an implementation that, if they merge, will make no sense.

For the workers who get to keep their jobs the operation comes as very good news, as well as for Banco Sabadell, which needs the merge due to its situation in the stock market. The problem is that Sabadell also has much to lose. Different sources consulted yesterday by this newspaper confirmed this concerning forecast.

"We're losing everything", lamented an Ibex-35 veteran. "It is very bad news for Catalonia, for the Catalan economy", he added. Another veteran of the sector agreed. "It is not only bad news for the Principality, but especially for the workers". A third voice regretted that the destiny of the centennial Banco Sabadell has been the following: "[Merging] With the Banco Santander would have been much better, but the market wants forceful operations from the point of view of labour occupation, and this one was the best".

Expecting a Catalan branch

These voices coincide in pointing out the differences between Banco Sabadell being absorbed by BBVA and the situation Seat is currently in. The automotive company is 100% in hands of a German owner but its top management team is still in Catalonia, as well as its operational and productive headquarters and its decision centres. This has a positive impact on the whole country not only in terms of labour but also in less visible aspects such as investment decisions. There is an added nuance: Sabadell is a bank, and as such, it is an economic facilitator for many companies. The loss of proximity to the decision-making centre can have repercussions on the economy as a whole.

Sources familiar with the negotiations assured that, in spite of everything, BBVA will maintain at least part of the Catalan bank's headquarters in Catalonia, which is well known for its management system and commercial operations. This would allow the entity to have offices in Biscay, Madrid and Barcelona, following the historical path of its large mergers. But no one dares to go into detail. Official sources of BBVA said that "everything is too incipient" to talk about Catalan headquarters.

While waiting for the small print, the truth is that BBVA has obtained the most coveted piece by big Spanish banks (along with Bankia, which was the most solvent institution in terms of capital thanks to the injection of public money it needed). Two aspects of Banco Sabadell stand out: on the one hand, its large portfolio of SMEs, a business that has historically been more profitable than that of private individuals. Secondly, Banco Sabadell is well established in the Mediterranean region, which is considered to be the most economically powerful area in Spain. In addition to Catalonia, the entity presided by Josep Oliu is very important in the Valencian Country after the acquisition of the controversial Banco CAM.

It is important to point out that Banco Sabadell is the fourth largest Catalan company in terms of turnover, behind Naturgy, CaixaBank, and Seat.

Rising in the stock market

With this operation - which is formally said to be under negotiation, but according to experts it is confirmed, because mergers are only communicated once the decision to go ahead has been taken -, the two entities want to put an end to their stock market crossover. Since January 1st 2008, the Catalan bank has lost 75% of its share price, and BBVA has suffered a fall of more than half its stock market value in the same period. Therefore, with this operation both banks expect to be more credible in the eyes of the markets.