Almost forty years without a hostile takeover attempt of the Spanish banking system

We are in 1987. Today is November 29th. War breaks out between the Bank of Bilbao and Banesto. Something completely unexpected in the Spanish banking world, where everything happens in an atmosphere of apparent calm and formality. The presidents of the big banks usually meet monthly at a large round table to discuss the sector’s problems, which ultimately ended in favor of competition. In 1987, dinners were held at the headquarters of the Central Bank under the leadership of its president, Alfonso Escames, who was one of those most shocked by Bilbao’s hostile takeover bid.

Basque bankwhich was then headed by José Angel Sánchez Asiain, the fourth largest Spanish bank, The company was looking to merge with another organization to increase its size and expand internationally. Banesto became the chosen one, which, although it was second in the ranking, was going through very difficult moments of management and leadership. Same November resigned

his positions as Vice President and General Manager of Banesto Jose Maria Lopez de Letonawithout receiving the support of the majority of the company’s historical directors in his position of rejecting control requests from Mario Conde, who had just landed in the bank with money received from the sale of antibiotics to the Italian company Montedison.

In November, Banco de Bilbao attempted a friendly merger for the first time. He offered Banesto shareholders six new shares plus one old Bilbao share for every ten Banesto shares, as well as 15,000 pesetas in cash from then on (€57.33), which represented a 40% premium. But Banesto’s board of directors rejected this proposal.

Next up was a hostile takeover bid for Bilbao. The next day, Pablo Garnica was replaced as President of Banesto by Mario Conde. Military operations began. Five days later, Banco de Bilbao was forced to abandon the attempt promoted by the regulator because the operation was dependent on a capital increase, which did not happen because it had to be approved by the shareholders meeting.

The hostile takeover failed and we all know how Banesto ended. With a hole of 600 billion pesetas (3.6 billion euros) and the intervention of the Bank of Spain on December 28, 1993.. Mario Conde was sentenced to twenty years in prison for fraud and embezzlement in Banesto.

Anyway, The bank’s board changed after the failure of a hostile takeover.

The Bank of Bilbao turned to Vizcaya. José Ángel Sánchez Asiaín and Pedro de Toledo agreed over dinner in 1988, immediately after Three Kings, to team up on equal terms. Both banks were among the most profitable in the sector. and when they reported this to the Minister of Economy, Carlos Solchaga, his first reaction was not very enthusiastic. He preferred that mergers allow a profitable company to absorb a less profitable one. He eventually agreed and BBV was born.to which the letter A of Argentaria would later be added.

Since then, there have been no more hostile takeover bids in the Spanish banking industry., but there are a lot of mergers and acquisitions. Everything has been agreed upon between the parties and, of course, with the Bank of Spain. The latest mergers on the Spanish banking map are Caixabank-Bankia and Unicaja-Liberbank.Both mergers by acquisition were agreed at the end of 2020 and materialized in 2021. In the period between and as a result of the 2008 financial crisis, there were integrations, mergers and acquisitions of savings banks and banks, resulting in 55 of the dozen institutions.

Other offers

Spanish banks have carried out other hostile takeover attempts, but outside our country. For example, he BBVA submitted a takeover bid for Banca Nazionale del Lavoro (BNL) in 2005, but withdrew a few months later due to the emergence of a “white knight” (a company friendly to the takeover to present a better offer to counter a hostile one), insurance company Unipol , who came to the defense of BNL.

Banco Santander has more success in its fight against ABN Amro, owned by Fortis and Royal Bank of Scotland in 2007. They managed to buy it and divide it among themselves. Santander retained the business in Italy, which it sold shortly thereafter for a million-dollar profit.

In the case of BBVA’s hostile takeover bid for Sabadellwhich does not have a solid core of shareholders that could stop the Basque bank, it is more difficult to predict the outcome.