BBVA and Sabadell will create a large bank with the greatest ability to pay dividends.
Its pillow easily surpasses those of Santander and CaixaBank. CreditSights estimates the combined group’s solvency to be 13.2%.
BBVA and Sabadell They started a dividend war to gain shareholder support. The first wants an alliance with the second, and the latter fights for continuation alone, offering €2.4 billion in rewards over two years. BBVA is ready to make a bet and is treading carefully: together they will create a group with more opportunities for dividend payments among large companies in Spain.
Analytical firm CreditSights carried out calculations and identified the difference with CaixaBank and Santander tall, but Sabadell also has arguments in his favor. Today it is the company with the most flexibility in paying its shareholders, and the only one that managed to raise the regulatory cushion in the first quarter of the year, which authorities are looking through a magnifying glass to green light the rewards.
It is known as the maximum distributable amount or cushion MDA (from its English acronym), which measures the distance between a business’s solvency and its regulatory requirements. Better than wider Sabadell – leader.
From a distance
At the end of March, the company’s margin was 437 basis points. almost double Santander’s, 100 basis points ahead of BBVA and 88 basis points ahead of CaixaBank.. This is the result of the race that Sabadell has embarked on since the Covid pandemic to improve its performance and ensure its shareholders are never left without a dividend again.
But the combined group will be even higher. The strengths of Sabadell and BBVA will feed off each other. create a bank with a solvency margin above the requirement of 465 basis points, according to CreditSights.
The difference with competitors will increase because Santander and CaixaBank reduced their shield in the first quarter. Regulators increased requirements for both banks, which worsened performance.
No one is in danger. The solvency of Spanish banks is higher than the requirements of the authoritieswhich, one by one, approved shareholder remuneration plans with dividends and repurchase of securities that they all presented.
It was also approved executive bonuses and CoCo coupon payouts, which are two other rewards that depend on how much the MDA cushion is deemed sufficient by regulators. The European Central Bank agreed to all payment intentions Santander, BBVA, CaixaBank and Sabadell.
Clear future
Everything indicates that there will be no problems in the future, whatever the outcome of the hostile takeover. CreditSights had to assess the needs that the sum of BBVA and Sabadell will have to make up their accounts and, in his opinion, the authorities will not consider the new group to be more risky, despite its larger size.
To begin with, the maximum quality capital of the combined company CET1 after completion of integration and synergies will be 13.2%. 50 basis points higher than BBVA alone and only slightly lower than what Sabadell currently has.. This will also make it the most capitalized large bank, ahead of Santander and CaixaBank.
But this is also something The low risk that regulators see in Spanish banking remains as its business model is more retail based. According to CreditSights analysts, the new group will have very similar requirements to those of only BBVA and Sabadell.
With more capital and the same requirements, Dividend Cushion Is Growing and this fuels the desire of the two banks to promise high rewards in all cases (individually or in a merger) to those who support them.