About 230 employees in León are awaiting a possible merger between BBVA and Sabadell.
The financial map is moving again, just as it did after the 2008 financial crisis, in terms of business concentration and the creation of ever larger enterprises. Thus, competition is becoming less and less and the commercial structure is thinning, which affects not only employment in the sector, but also the number of offices. This is particularly worrying in provinces such as León, where rural areas have been protesting financial exclusion in recent years.
BBVA and Banco Sabadell (Sabadell Herrero, under its León brand) return, almost four years after their first attempt, to open a merger-by-acquisition scenario that would create the largest banking group in the country and the third in Europe. In just 16 years, the country’s financial map has shrunk from about 55 enterprises with territorial weight and presence to just a dozen firms of national importance.
In the case of the two banks that will now explore a further step towards sector concentration, it is worth highlighting the important implementation that both have in the province of León. Although BBVA has already stated that there will be no traumatic restructuring (the latest agreements in the sector include early retirement and preferential sick leave), the ambiguity of some services in the province is obvious. In some cases, such as in the center of Leon, the plants are almost door to door.
The fact is that the two banks that are now in the spotlight have about 230 employees and a total of 44 branches in the province. There are more than a dozen in the capital of Leon, another important part in Ponferrada, and the rest are distributed among the capitals of the regions with the greatest economic activity. BBVA has 26 offices in the province, while Sabadell Herrero has 18.
In terms of employment, the latter company employs 80 people in its branches and services in León. In the case of BBVA, the company refuses to provide employment data, but union sources indicate that its offices have a total of about 150 employees. In total, BBVA has about 28,000 employees throughout the country, while Sabadell has about 14,000. In the case of the province of León, between the two entities there are 20% of the total number of branches that have undergone a radical process of reconversion and concentration in the sector; and a similar percentage of the total employment in banking, which currently amounts to about 1,200 workers in the province.
The talks come at a time of particular stability in the banking sector, which has generated record profits over the past two years thanks to the evolution of interest rates. BBVA closed 2023 with a profit of more than 8 billion euros, and in the first quarter of this year announced a profit of 2,200 million. Sabadell, for his part, earned 1.332 million euros in 2023 and 308 million between January and March this year.
Banco Sabadell will resist BBVA to improve merger terms
This is the start of a pivotal week for the operation that has shaken Spain’s banking card. Banco Sabadell is expected to meet with its board of directors between Monday and Tuesday to decide whether to sit down at the table to negotiate a merger with BBVA. And everything indicates that he does not intend to make life easier for the bank headed by Carlos Torres. Sources in the financial sector indicate that Sabadell managers did not like either the form or the content of the offer, which fell into their hands just four minutes before it was made public. At the top of the historic Catalan bank, the word “resistance” is already spreading like wildfire. That is, to put pressure on the path that will remain for the merger until it reaches the improvement of the conditions proposed by BBVA in its communication, as indicated by the same sources. Five days after the details became known, Sabadell continues to put off the idea of sending a formal response to BBVA. Even the market understands that it will play this temporary card to put pressure on improved supply, both in terms of management and even in terms of prices. BBVA’s goal will be to offer to pay at least part of the transaction (now offered as a stock swap) in cash. Renta 4 Banco analysts do not rule out that the Bilbao-headquartered bank will eventually concede on this issue, taking advantage of its excess capital, which they estimate at 3.1 billion euros. But inside the bank there is a strong belief that its supply is more than enough.
In fact, the company believes that its offer is sufficient and more than attractive to Sabadell shareholders; that if the market believed that there might be another offer, the company’s securities would trade above the exchange value, which would be equivalent to approximately 2.26 euros per share; and if BBVA shares are down about 8% since the process began, it’s an indication that investors think it’s already a generous offer. In fact, everyone agrees that compared to the previous attempt in 2020, BBVA’s new proposal practically forces Josep Oliu’s people to at least come to the negotiating table. First of all, because the enterprise does not have a solid core in its capital that can withstand this.
Unattached Advice Here lies one of the key points of disagreement. It is common practice that when a transaction of such significance is announced, the directors of the bank to which the proposal is directed are already notified. And they are responsible for convincing shareholders to accept or reject the proposal. But in this case, Sabadell’s management learned of BBVA’s intentions almost simultaneously with the market. It is worth recalling that among the largest shareholders of the Alicante company is the BlackRock fund (also a shareholder of BBVA) with 3.6% of the capital, followed by the Mexican investor David Martinez (3.4%) and the Dimensional Funds and According to the National Securities Market Commission (CNMV), Fintech Europe’s share is just over 3%. Next will be the Millenium Group, which owns only 1034% of the bank’s shares through financial instruments. According to some experts, such dispersion could be an advantage for BBVA in negotiations. But this does not guarantee that they will come true. First of all, because Banco Sabadell is aware that its situation has changed a lot since the pandemic and can now continue on its way without problems, even in the looming new scenario of lower interest rates.
BBVA is managed in the same context. That is, this merger is not driven by strict necessity, as it might have happened four years ago, but by the desire to continue growth and gain market share in order to distance itself from other industry leaders.
The ball is now in Banco Sabadell’s court, which must decide whether to accept the offer and at what price during this week.