MADRID Dec. 30 () –
BBVA faces a year 2025 marked by several challenges, some of them common to the rest of the Spanish and European banks, but another specific one, such as the takeover bid, and subsequent merger, it wants to launch on Banco Sabadell with the aim of gaining scale and having greater weight in a developed market like the Spanish one.
Beyond the search for profitability in an environment with lower rates than in 2023 and 2024, and which all banks are already facing, the entity chaired by Carlos Torres has been immersed for several months in putting together the operation, which includes its approval by part of the National Markets and Competition Commission (CNMC), the National Securities Market Commission (CNMV) and the Government itself – if it finally opts for a merger by absorption between both entities -.
Seven months have passed since the bank made a formal offer to the board of directors of Banco Sabadell to merge both entities, a proposal that, however, was rejected by the ‘leadership’ of the Vallesan entity. This led BBVA to announce at the beginning of May that it was extending its offer – in practically the same terms as to the board of directors – to shareholders in the form of a ‘hostile’ takeover bid.
To this end, it presented a calendar that included the possibility of having authorizations within a maximum period of eight months to be able to launch the takeover bid that would lead to closing the merger in mid-2025. Among the requirements to open the acceptance period for the The takeover bid had to be authorized by the European Central Bank (ECB), the CNMV and the British financial regulator.
Furthermore, to achieve the effectiveness of the operation, the bank established that it would achieve 50.01% acceptance of the capital – although the offer will be launched on 100% of the shares – and obtain authorization from the CNMC.
At the end of 2024, BBVA has achieved ‘non-opposition’ from the ECB, which measures the solvency of the resulting entity, and from the British Prudential Authority (PRA), as well as other organizations: the European Commission , Mexico and Morocco, France or Portugal, among others.
However, by 2025, two of the major authorizations will remain pending: those of the CNMC and the CNMV, which could approve the OPA prospectus without having the ‘approval’ of Competition, but which has already announced that it will wait to know the opinion on the banking concentration so that investors can come to the operation with the greatest amount of information possible.
COMPETITOR ANALYSIS
The operation, therefore, is awaiting what the CNMC concludes on the possible impact on the competition of the banking system in Spain.
In mid-November, the CNMC agreed to elevate the analysis of the takeover bid to phase 2 as it was unable to rule out a risk of worsening commercial conditions for SMEs, a reduction in credit also to SMEs, or a worsening of conditions for the acquisition business, after analyzing the commitments given by BBVA for it to be approved in phase 1.
In its succinct note, published on November 20, Competition explained, for example, that the operation would give rise to shares of more than 30% in Spain in the POS market, so the resulting entity would be the leader in the country: it would concentrate the second and third POS operator and would eliminate an “important competitive force.”
Regarding the risk of credit reduction to SMEs, he pointed out that the market test carried out in phase 1 was not conclusive, since “certain banking actors consider that the diversification needs of SMEs after the concentration can be satisfied by other operators, while the associations identify the mentioned risk”.
It also highlighted that the economic reports of BBVA and Sabadell “differed” in terms of the level of diversification of SMEs at an aggregate level and “some shortcomings” were observed in the model presented by Sabadell, which “quantifies the possible reduction in credit that could result from the transaction.”
Regarding the possible worsening of commercial conditions, the CNMC explained that the resulting entity would have “incentive and capacity” to modify the conditions […] to SMEs, “without the risk of losing clients to another entity”, where it remains the sole operator or with reduced competition, among other issues.
ALLEGATIONS AND EXPANSION OF THE CALENDAR
The opening of phase 2 by the CNMC allowed the possibility of both Sabadell and other parties with legitimate interest in the operation being able to present allegations, while allowing BBVA to provide more information. To formalize this appearance, a period of ten days was opened after the publication of the succinct note, before which fifteen organizations appeared, such as business associations from Catalonia, Asturias or Galicia, chambers of commerce and unions such as UGT or CCOO.
However, the CNMC has rejected all these representations except that of Sabadell, since it is the only one involved who has a legitimate interest, and not a general interest in the operation. Furthermore, in this process, and as provided for in the Competition Defense Law, the CNMC will collect reports from the industry authorities of Catalonia and the Valencian Community, the two regions that would have the greatest impact from the operation.
Raising the operation to phase 2 means, in practice, extending the calendar of the takeover bid managed by BBVA. This phase can last up to three months, although this period does not include possible suspensions that Competition may apply to request more information.
Once this in-depth analysis is completed, Competition may approve the operation without conditions, with them or prohibit them. In the case of the last two cases, the operation would be submitted to the Ministry of Economy, which could take it, in turn, to the Council of Ministers and which would rule on criteria other than competition, such as defense and national security or the guarantee of adequate maintenance of sectoral regulation objectives.
It is worth remembering at this point that the Minister of Economy, Commerce and Business, Carlos Body, has spoken out several times against the operation, pointing out a possible impact, not only on competition in the sector, but also on financial inclusion. the impact on employment or territorial cohesion.
ANALYST VISION
Asked about this operation, XTB analyst Javier Cabrera believes that the prospects for the operation have not changed much after the CNMC’s decision. He considers that the biggest problem that BBVA may face is if the CNMC sets conditions and the operation goes to the Council of Ministers, where the Government can “put pressure” by putting conditions that harm the profitability of the operation. “This is the worst scenario, given the statements that some members of the Government have already made,” he adds.
Cabrera points out that there is still a division of “opinions” on the resolution of the takeover bid, although XTB believes that it will finally be carried out following the position of the ECB and the “relatively recent merger” – in 2021, of CaixaBank and Bankia, which “makes it difficult to justify very aggressive conditions on the part of the Government.”
However, he points out that the more time passes to approve the takeover bid, “the more risk there is” that it will be carried out, since the bank faces a “challenging” 2025 with “aggressive” rate cuts by the ECB, the economic slowdown of Europe and the bank tax.
Furthermore, as time passes, the costs may be higher for BBVA, which will have to adjust the price it wants to offer to shareholders to the dividends distributed by the entity itself, such as Banco Sabadell.
Add Comment