The attempt to merger of BBVA with Banco Sabadell It still has turns to take. One of the possible derivatives affects one of the banks that the market continues to see as a candidate to enter into a merger to gain profitability: Unicaja. Her ideal 'boyfriend' is Banco Sabadell, according to the market, but this possibility that the gurus contemplate will go to waste if the BBVA Banco Sabadell union goes ahead.

UNICAJA, BANCO SABADELL AND THE INDEPENDENCE SPEECH

Unicaja also maintains Banco Sabadell's discourse about remaining independent, which does not mean that it has to remain alone, although that is the message they want to send. He is a stone guest and a luxury spectator of what may happen between Banco Sabadell and BBVA, but that operation, whether it comes out or not, will have relevance in the Spanish financial sector.

Unicaja also maintains Banco Sabadell's speech about remaining independent, which does not mean that it has to remain alone

First we have to see if, after the 'slam of the door' received, BBVA makes a move in relation to Banco Sabadell. Financial sources familiar with the ins and outs of the operation point out that BBVA has three options left: surrender, present a new offer or opt for the scorched earth policy and go all out in a hostile takeover, but with a strong cash payment, because “with actions it wouldn't work.”

This possibility, that of the takeover bid, makes sense of a phrase that legend attributes to the former Minister of Economy, Carlos Solchaga, who was holder of this portfolio during the time of Felipe Gonzalez as president of the Government. The recipient of it was the then president of the Bank of Vizcaya, Pedro Toledo in the 80's of the last century: “Either you take opan”. Banco de Bilbao and Banco de Vizcaya merged in 1988, an operation from which Banco Bilbao Vizcaya, the well-known BBV, was born.

«Apparently the agreement, which was announced on January 21, 1988, was easily reached, although the decision of who would preside over the new entity was the first in a long list of problems that made the entity's operation difficult in the first year after the fusion”. José Ángel Sánchez Asiaín, who was the president of Banco de Bilbao, and Pedro Toledo, his counterpart in Vizcaya, They became co-presidents of the new entity: Banco Bilbao Vizcaya, they recall on the website 'finance for mortals'.

“He co-president of Banco Bilbao-Vizcaya (Pedro Toledo) said that he lost all uncertainty about the need to merge his entity when the Minister of Economy, Carlos Solchaga, a friend of many years, told me in his office that, due to the capital structure, financial health and high management capacity of my bank, u opaba or it was opaque. It was in December 1987. Shortly after the operation was completed with the (Bank) Bilbao”, according to the newspaper 'El País' on July 20, 1988.

This phrase gains strength at a time like the current one, after BBVA's offer to Banco Sabadell. It is gaining strength in the sense that Unicaja and other entities can 'wake up' and be more open to corporate operations that until now they have not seen as necessary or have not dared to face. Of course, if Banco Sabadell 'gets rid' of BBVA and remains alone, there will be opportunities

THE CHALLENGE OF PROFITABILITY

Meanwhile, Unicaja still needs to improve its profitability to convince the market that it does not need a merger. For its part, Banco Sabadell considers that it is in an excellent position to remain independent.

Unicaja rises on the stock market, but it still needs to improve its profitability to convince the market that it does not need a merger

It remains to be seen what happens with Banco Sabadell, but yes, for whatever reason, it ends up joining Banco Sabadell and Unicaja wants a merger, the entity of Andalusian origin will only have, on paper, Kutxabank, Abanca and Ibercaja, sources emphasize financial.

The rest of the banks that may be on the agenda for a corporate operation are at most a union of equals or almost. However, BBVA's operation with Banco Sabadell could be good for Unicaja in its aspiration to continue alone. The union with the entity chaired by Josep Oliu would mean many headaches for Unicaja, especially if it were considered that the headquarters would leave Malaga. This will be the case regardless of who the entity wants to merge with the bank of Andalusian origin.

Now, the market can move beyond Unicaja. «In the Spanish banking environment, various entities are emerging as candidates for future mergers or acquisitions. Bankinter stands out for its robust presence in retail and private banking, being attractive, but with integration challenges due to its unique culture. Unicaja, now merged with Liberbank, is positioned as an important player with its solid base in Andalusia,” says IG Sales Operations Analyst, Diego Morín.

«Ibercaja and Kutxabank, with strong regional ties and diversification of services, are also considered potential targets, although their independence and complicated structures present challenges. Abanca, with its focus on innovation and dynamic growth, completes the list as an attractive but modest candidate for large corporate moves. The evolution of these possibilities will depend on market conditions and the corporate strategies of each entity,” he points out.

THE OTHER OPTIONS

In the case of Unicaja, the question is which dance partners are available and if they work, because Ibercaja, Abanca or Kutxa, have a similar cut to Unicaja and may not resolve the issue of the profitability of the entity whose CEO is Isidro Rubiales. Abanca, if it sees an opportunity, could be an option but, for reasons of few duplications, the best candidate is Banco Sabadell, but first we have to see what happens, finally, with BBVA.

Another point is the 'timing'. And Unicaja, which is immersed in the last year of the 2022-2024 Strategic Plan, a plan that set a target of 9% profitability on tangible assets (RoTe), a goal that the bank hopes to exceed once this year ends. In fact, Unicaja has to present a new strategic plan that will be the route for the period 2025-2027. The guide of this plan will be CEO Isidro Rubiales and they may not want a merger until they see what happens in 2027 with profitability. For now, they resist.

UNICAJA IS IMMERSED IN THE LAST YEAR OF THE 2022-2024 STRATEGIC PLAN

The worst moments in relation to the governance of the bank of Andalusian origin have already passed and according to sources from the entity and the workers' sphere, there are no changes in the bank's commitment to remain alone and not enter into mergers. They want to continue alone and consider that they have enough strengths to do so. “There have been no contacts nor is any corporate operation on the table. In any case, the bank's objective is to improve profitability and the quality of service to our clients. These two are the two issues on which the entity is focused,” Unicaja sources have been highlighting.

The brake on the merger may come from the management teams of the two entities, especially from the new team that begins its journey in Unicaja, which probably wants to have time to “try” alone or even look for another alternative that would It would allow them to be “mouse heads” rather than “lion tails,” market sources point out.

THE OBSTACLE OF PHYSICALITY

Among the aspects that may prevent the possible merger between Banco Sabadell and Unicaja from being considered or, if it is done, may cause it to fail, there are three that stand out from various financial sources consulted by MERCA2. The taxation relating to the Unicaja Foundation, Unicaja's largest shareholder, the distribution of positions in the hypothetical resulting entity and where its headquarters are located.

THE TAXATION RELATING TO THE UNICAJA FOUNDATION, THE DISTRIBUTION OF CHARGES IN THE HYPOTHETICAL RESULTING ENTITY AND WHERE THE REGISTERED OFFICE IS LOCATED ARE OBSTACLES TO A POSSIBLE MERGER OF SABADELL AND UNICAJA

One of the keys to a possible merger is the link with Andalusia, which is only 100% secure and in the way that Andalusian society wants, if Unicaja remains alone.

This point is fundamental. Without an agreement on the headquarters, basically remaining in Malaga, it will be difficult for there to be a merger with Unicaja.

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