Spain vows to block BBVA’s hostile bid for rival bank | national

Spain vows to block BBVA’s hostile bid for rival bank | national
Spain vows to block BBVA’s hostile bid for rival bank | national

BBVA’s new bid came three days after Sabadell’s board of directors rejected a merger proposal, saying it was “not in the best interest” of the bank.

The takeover proposal values ​​Sabadell, Spain’s fourth-largest banking group in terms of capitalization, at nearly 11.5 billion euros ($12.3 billion).

It would be carried out under the same conditions as the initial approach — an exchange of one new BBVA share for every 4.83 Sabadell shares, a 30-percent premium over the April 29 closing price of both banks, BBVA said.

“This is an extraordinarily attractive offer,” BBVA Chair Carlos Torres Vila told a news conference, adding the two lenders were “complementary.”

A takeover would create a banking powerhouse capable of competing with Santander — Spain’s leading bank — as well as with European giants such as HSBC and BNP Paribas.

But Prime Minister Pedro Sanchez’s leftist government swiftly condemned the move, as did the regional government of Catalonia where Sabadell was born and where it has a strong presence.

Labor Minister Yolanda Diaz said it was against Spain’s “interests” because it “would destroy many jobs.”

Economy Minister Carlos Cuerpo warned the government “will have the last word when it comes to authorizing the operation” which he said would be “potentially damaging.”

The takeover bid needs the green light from the European Central Bank as well as the competition authorities in the nations where the lenders operate, including Spain and Britain.

But Torres Vila said he was convinced “that the government and other authorities will come to appreciate the true value of the operation”, which he said would increase “lending capacity” to businesses and individuals.

– ‘Significantly undervalues’ Sabadell –

BBVA, which also has operations in Mexico, Argentina and Turkey, is Spain’s second-largest banking group in terms of capitalization. It has 74.1 million customers and employs nearly 121,000 people.

Sabadell operates in 14 countries and has nearly 20 million customers and some 19,000 workers.

A Sabadell spokesperson could not be immediately reached for comment.

The bank had said on Monday that the initial offer “significantly undervalues ​​the potential of Banco Sabadell and its standalone growth prospects.”

It also pointed to the recent “decline and volatility in the BBVA share price” which reflected “the uncertainty around the value of the proposal.”

BBVA then informed Sabadell in a letter that it had “no room” to improve its offer, which it considered generous.

Shares in Sabadell were up by around three percent in early afternoon trading, while BBVA fell by over six percent.

– Bank consolidation –

The two banks had initially announced a plan to merge in November 2020 with the aim of better weathering the economic crisis triggered by the Covid-19 pandemic.

But it was scrapped just 10 days later, with Sabadell saying that BBVA’s offer did not reflect the real value of its business.

In the ensuing months, Sabadell undertook a major restructuring plan to slash costs that resulted in 1,800 redundancies, with BBVA going through a similar process, shedding 3,000 jobs.

Both have since recovered as has the wider Spanish banking sector which posted record profits in recent months, despite an exceptional windfall tax imposed by Spain’s left-wing government to help households cope with soaring consumer prices.

BBVA posted a 19 percent rise in first-quarter net profits to 2.2 billion euros. Sabadell posted a record net profit of 308 million euros, up 50 percent.

Spain’s banking sector underwent a first wave of consolidation during the 2008 global financial crisis, with the collapse of provincial savings banks which were absorbed by the bigger players.

It underwent further consolidation in 2021 when Caixabank took over Bankia, creating Spain’s third largest banking group, which was followed by Unicaja’s acquisition of Liberbank creating Spain’s fifth largest domestic lender.

vab/ds/lth

 
For Latest Updates Follow us on Google News
 

-

PREV Boeing Starliner launch live – schedule and where to watch it online via NASA TV this June 1 | MIX
NEXT Dep. Morón vs. San Miguel live: how they get to the game