Thursday morning BBVA threw a takeover of Banco Sabadell after the failure of the merger proposal presented days before by the Bilbao bank to the board of directors of the Alicante entity, led by Josep Oliu. The board of Banco Sabadell said no to the BBVA merger proposal and it reacted with a public offer for the acquisition of shares (takeover bid) about the business of the Alicante-based entity. A proposal with the same terms of the merger but much less friendly since now it involves offering Banco Sabadell shareholders the purchase of your titles and not a merger of banks as such. So things are, Who has the last word in BBVA's takeover bid for Banco Sabadell?

First step: the “non-opposition” of the ECB

He first step that has to happen BBVA takeover bid regarding Banco Sabadell shares is at the European level. He European Central Bank (ECB) -as a community central bank- must study the proposal of the bank led by Carlos Torres and decide whether to go ahead. On paper – in the offer presented by BBVA for Banco Sabadell shares – this step is mentioned as “obtaining non-opposition” by the ECB. However, you must also notify the information to the Bank of Spain, headed by Pablo Hernández de Cos, without needing his approval or authorization for the operation on Banco Sabadell's business.

What does the ECB say? The community bank has not yet spoken about BBVA's takeover bid for Banco Sabadell, although its vice president has done so, Luis de Guindos, during a speech in Madrid that same Thursday, at least with his first words. The former Minister of Economy assured, just hours after learning of BBVA's new attempt to take over Banco Sabadell, that the central bank had to authorize the operation based on the “solvency principle” and the “principle of prudential”. All this with the stability of the financial system as a key aspect of the analysis.

Following the words of the former minister, that same morning the president of BBVA, Carlos Torres, He assured in the call with analysts and in the subsequent press conference that the ECB's preliminary proposal is “favorable” to the merger of both banks. A merger that appears as a final result on paper and that has materialized in practice through a hostile takeover of Sabadell's business in response to the first no from the Alicante bank Oliu to the merger presented by the Bilbao entity. Torres confirmed to analysts and investors that until Thursday he had not received approval from the ECB, and decided to follow the formal process, but his words were key for the future. “It seems that it is a favorable opinion,” he assured his analysts and investors.

Guindos himself has assured that the takeover bid has to go through the ECB's table due to aspects of “solvency” and “prudence” but he washes his hands of issues of competence. This is where other protagonists come in on the path to making the takeover a reality: the competition authorities at the national level.

Second step: the CNMV

The National Securities Markets Commission (CNMV) must give approval to the operation after the first “non-opposition” of the ECB. And on paper it is very clear: “the CNMV will not authorize the offer until is accredited with obtaining, expressly or tacitly, the non-opposition reference of the European Central Bank.” All of this as indicated in article 26.2 of Royal Decree 1066/2007.

The CNMV is the stock market regulator national and, due to their listed obligations, both BBVA and Banco Sabadell must send the information that they consider necessary to maintain the transparency and good functioning for its investors and the rest of the actors in the Spanish stock market. This is what they have done until now, with a large number of documents sent to the regulator every day, both by one entity and another, since that first merger contact communicated by BBVA to the regulator on Tuesday, April 30.

Also the CNMV you can request information to the entities if, due to their role as refereeconsider that there is not enough transparency for the functioning of the market. The last paper sent to the CNMV comes from Sabadell Bank, around 11 p.m. on Thursday, in which he asks the regulator that Carlos Torres, as president of BBVA, explain who are the shareholders from Banco Sabadell who, in his words, would have interest has already been transferred in formalizing the takeover bid over 50.01% of Banco Sabadell shares. “Incomplete data that could affect the market”, in terms of Banco Sabadell, which the president hinted at in the call with analysts and in the subsequent online press conference, both held on Thursday morning, but which do not clarify the name of said shareholders.

Third step: Competition in the sector

With the approval of the ECB as a community bank and the CNMV as the national stock market regulator, the operation would also have to go through a third procedure in terms of competence. And after the hostile takeover appears the objective of fuse the banking business, all despite the rejection of Torres' friendly offer by the board of directors led by Oliu. BBVA maintains its objective, and the same terms, of merging its business with Banco Sabadell although the way of doing so has changed. That is why it continues to try to create a large bank at national and European levelbut also facing the outside.

However, the BBVA-Banco Sabadell operation only requires the competition authorization in Spainissued by the National Markets and Competition Commission (CNMC). As the offer presented by BBVA on paper explains in detail, the operation must be submitted for consultation to the authorities of the United Kingdom, Mexico or the United States but will only need Spanish approval to be able to move forward. At the moment it is not known what the CNMC will say about the merger – it must first overcome the two previous obstacles – but, based on its role in the previous mergers such as Caixabank-Bankia or Unicaja-Liberbank, would have to develop a strong argument to say no to BBVA in this attempt. What is known is that the Bilbao bank reported its intention to merge with the CNMC in a “courtesy call” during the semi-festive week in which it all began.

Fourth step: What can the Government say?

The public offer for the acquisition of shares presented by BBVA early Thursday morning contemplates on paper a series of procedures and approvals that the operation must pass through various regulatory bodies. The Government as such but the public competition authorities, so also the Executive, through the Ministry of Economy, I would have to study the effects of the operation. This is where the Banking Supervision Law, prepared and approved in 2014 by Luis de Guindos as Minister of Economy. Once again the vice president of the ECB appears in BBVA's way to take over Sabadell, this time indirectly.

The Government has in its hands the Banking Regulation and Supervision Law, approved by de Guindos ten years ago. Precisely on its tenth anniversary, this norm could become key if the Government finally decides stop BBVA's intentions about Sabadell. However, the Executive could only stop the merger of both entities, if it finally occurred, but not the takeover launched on the Bilbao bank as such. And the entire Executive, and the entire political class in general, has spoken out against of the BBVA takeover bid about the Alicante bank.

The real protagonists: the shareholders of Banco Sabadell

BBVA has set an expected deadline of between six and eight months to meet your goal: buy the 50.01% of shares from Banco Sabadell and later fuse the entities. But for this it has to pass these four terms. If the approval, authorization or “non-opposition” – whatever the terminology – is obtained from the ECB, the CNMV, the CNMC and the Government, the process could begin there. subscription period of actions where the real ones come into play protagonists of the operation and those responsible for BBVA fulfilling its intention or not: the shareholders of the Alicante entity.

The most important role is played by shareholders of Banco Sabadell if Carlos Torres' entity gets the ok of the organisms corresponding. “We do not know if the operation will materialize, it will depend on the shareholders,” de Guindos said last Thursday. And these are the ones who have to decide now if they accept BBVA's offer, that is, the exchange of one BBVA share for 4.83 Banco Sabadell shares. This is the first share exchange that BBVA offered two weeks ago to Banco Sabadell in its attempted merger and that it has now maintained in the hostile takeover bid.

Before knowing the shareholders' decision, which BBVA expects to receive at the end of this 2024 or even at the start of 2025, the offer documents still have to pass through many hands. However, the future of Banco Sabadell is in the hands of the shareholders of the Alicante bank, who must decide whether to accept the price offered by the Bilbao bank to sell your shares or, stay as they are and keep Sabadell alone, focused on its growth strategy.

You May Also Like

More From Author

+ There are no comments

Add yours