Christine Lagarde, president of the European Central Bank ECB

Economy insists that preventing it if it affects customers or the system

May 10, 2024 . Updated at 7:52 p.m.

The war that has been unleashed by the announcement of hostile takeover launched on Thursday by BBVA on Banco Sabadell will be released in battlefields beyond the boards of directors of the entities in contention. The reason is none other than the authorizations that the Basque bank needs to complete the operation, in the event that the Catalan shareholders say yes, I want to its offer and it manages to add a minimum of 50.01% of the capital. Because despite overcoming that phase – already complicated in itself, given the atomization of the property of the Catalan entity – the controversial hostile takeover will still have stages to complete, and one of them involves blessing – in the form of non-opposition — from the European Central Bank (ECB).

The institution that runs Christine Lagardealthough it is not officially pronounced, he sees the operation favorablyaccording to the president of BBVA, Carlos Torres, since the ECB has been encouraging for years a banking concentration that gives birth to powerful entities, if possible, transnational, an extreme that has not yet occurred. The new entity, if BBVA and Sabadell merge, would be the tenth largest in Europe.




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The one who has opposed it from minute zero, after learning about the operation, has been the Government. The Minister of Economy, Carlos Body, confirmed this Friday that he had already transferred the unfavorable opinion of the Executive to all the actors involved, including the ECB, the rest of the supervisors and regulators, as well as Torres. Corps explained that it is our obligation to do so, remembering the arguments already used the day before to justify his rejection of the operation, mainly the risks that excessive banking concentration would imply and its negative effect on competition, customers and financial exclusion, especially in rural areas.




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Financial stability

The head of Economy did not forget to refer to the impact that the absorption of Sabadell would have in terms of financial stability or monetary policy transmission —something the governor of the Bank of Spain warned about a few days ago. This may seem very abstract, but we are talking about the increase in remuneration of depositsFor example, Body explained, appealing to citizens' pockets.

The closure of offices or the adjustment of personnel are other aspects that also worry the Government (and the unions, which yesterday again expressed their opposition due to the possible impact on employment). So much so that I insisted that reject the merger even if the supervisors bless it. From Economy they insist that, even if BBVA manages to acquire the titles of its Catalan competitor, its is the last word to give the green light to the subsequent integration between both entities.

About a year of procedures

And the truth is that although, by virtue of the banking regulation law, it is the Executive that is responsible for authorizing the merger by absorption, it cannot do anything regarding the opa presented, whose processing is already underway and that—as shown in the graph that accompanies the information—will last about a year.

Following Thursday's announcement, BBVA now has one month to present the operation brochure and the complete documentation to the CNMV, which once it receives this documentation must decide within a period of 5 days whether or not to admit it for processing. If you do so, you will have 20 days (extendable, which makes the calendar approximate) to analyze and authorize the offer.

The next step is that, within a maximum of ten days, the board of directors of Sabadell must issue its opinion, which is non-binding.

The ssupervisors of the Spanish and British markets (CNMV and FCB, by the TSB, the British subsidiary of Sabadell), as well as the Competition Authority (CNMC), will have to review the operation and evaluate its impact before giving it the green light.

The next steps will be to call a meeting for BBVA shareholders to approve the capital increase with which to execute the takeover bid, so that the ECB will then issue its non-opposition to the operation, which the Basque bank must previously notify the Bank of Spain. An extraordinary meeting of Banco Sabadell could then be held, although it is not essential, since acceptance of BBVA's offer can be made by investors individually.

The bank led by Torres estimates that all the previous processing will be carried out between six and eight months. The shorter the acceptance period for the takeover bid will be: between a minimum of 15 days and a maximum of 70.

If 50.01% of the capital is not reached, the operation will decline. But, if he achieves this, he will still have to overcome one last obstacle that, in light of the public statements of the Executive, will not be minor. And it is that he Government will have a six-month period to authorize the merger of the two banks.

Precisely, the Spanish Association of Minority Shareholders of Listed Companies (Aemec) defended this Friday the right of companies to launch takeover bids, stressing that the Government could not in any case veto them.

The president of BBVA expressed confidence that the Executive finally understands that the offer to take over Sabadell will benefit all the actors and the country as a whole. Remember that Competition has to make decisions in the first stage of the operation, and the ECB at the regulatory level, and then we trust the Economy to do the same.

Although the ECB is not going to be an obstacle, the vice president of the supervisor, Luis de Guindos, who this Thursday participated in an event in Madrid, opted for prudence and recalled that Frankfurt will have to analyze whether the integration will have effects on the stability of the system. Spanish financial The ECB has to authorize it and always does so based on the principle of solvency and the prudential principle. What we are looking for is the stability of the financial system in the euro zone and Spain is an important country, he said.

The CNMV will study the Catalan bank's complaint against the Basque bank for violating the law

Banco Sabadell has brought out the heavy artillery to try to hinder the hostile takeover launched by BBVA, which the board of directors of the Catalan bank strongly opposed on Monday. Thus, in another movement as unusual as the presentation of the takeover bid itself, Sabadell filed a complaint with the CNMV On Thursday night – this is a relevant fact – that Carlos Torres' bank could be violating the regulations with the information provided to analysts and investors to explain its offer, since it assures that it is incomplete and could affect the market.

The supervisor of the listed companies confirmed yesterday that he will study Sabadell's complaint. It, however, will not paralyze the processing of the takeover bid, although it will allow the entity led by Josep Oliu to gain time and information.

Interested shareholders

And the complaint registered with the CNMV lies in the fact that Torres stated during the presentation of the takeover bid that BBVA already had signs of interest from some relevant shareholders, who had contacted the bank to express their support for the operation. Everything indicates that, given the fragmentation of the entity's shareholding, those interested in the takeover could be funds, which concentrate 52% of the capital in stakes of less than 4%, while minority investors account for the remaining 48%.

Legal sources consulted point out that this constitutes information that should be included in the offer announcement that BBVA sent to the CNMV and that may condition the market in relation to the operation.

Sabadell is taking advantage of the period it has (one month) before BBVA presents the takeover prospectus, since from that moment on its room for maneuver will disappear, as established by the takeover law, the violation of which it now warns.

Calm in the park

On the other hand, the stock market seems to be gradually recovering calm after the upheavals of these last two weeks and, after punishing the BBVA titles on Thursday and once again boosting those from Sabadell, This Friday both values ​​closed in green.

Specifically, the shares of the Basque bank rose 1.15%, to close at 9.71 euros, while those of the Alicante-based entity recorded a more modest advance, of 0.73%, to 1. 87 euros.




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