Banco Sabadell faces a key week to decide whether to go it alone or agree to join BBVA.

VALENCIA. (EFE) Starting tomorrow, Banco Sabadell faces a key week, since after several days of studying the takeover offer from BBVA, it will have to decide whether it is only considering its future, whether it accepts the proposed exchange of shares or is ready to negotiate but demands an improvement in the offer.

These are some clues to the proposal being studied by the Catalan bank and the context in which this operation is developing.

Largest transaction since the merger of CaixaBank and Bankia

BBVA’s interest in taking over Banco Sabadell, acknowledged on Tuesday and detailed on Wednesday along with a formal offer, represents the Spanish banking council’s biggest move since 2020, when CaixaBank and Bankia announced their merger.

If this operation results in CaixaBank becoming the banking leader in Spain, then if completed, it could catapult BBVA onto the European podium and place it only behind BNP Paribas and Santander.

Bank concentration risk

BBVA’s proposal to Sabadell has renewed the debate about the concentration of banking activities in Spain and whether this new integration will guarantee effective competition in the sector, since the Spanish market will be controlled by three main players: CaixaBank, Santander and BBVA.

Economy Minister Carlos Bodi said a few days ago that it was important that the banking sector continue to maintain a “competitive” position if the operation were to proceed, and the Generalitat of Caalunya and Valencia itself, as well as the business sectors of Valencia and Catalonia, expressed concerns about the downside risk banking competition.

Have 16% of the pot received or continue alone

Banco Sabadell’s board of directors must decide whether it considers BBVA’s offer sufficient or not. This means Sabadell shareholders will receive a 16% stake in the resulting bank (BBVA is offering to stake one share for every 4.83 Sabadell shares) or a fine if you walk away. but are open to negotiating a higher offer from BBVA.

BBVA is also proposing two operational headquarters for the new bank: one in BBVA City in Madrid and the other in Sant Cugat del Vallès (Barcelona), where Sabadell’s main operational center is currently located.

Regarding the distribution of power, BBVA proposes that the three current directors of Sabadell join BBVA’s highest management body, which has 15 members but no executive functions, and that one of them assume the post of vice president.

An offer that comes at a pleasant time for Sabadell

BBVA’s merger by takeover proposal with Sabadell comes at a welcome moment for the Catalan bank, as after difficult times on the stock market in 2020, when its shares were worth just €0.26, it broke record performance last year. with 1.331 million euros, and record profits are also expected this year.

What’s more, in the case of its UK subsidiary TSB, it had already gone on the run and was making headcount cuts to maximize its efficiency in 2025, after a rocky start in which it received a fine from the UK regulator for problems migrating its computing platform.

Proof of the good moment that Banco Sabadell is now experiencing is that its value on the stock market exceeds $10 billion, four times more than when BBVA tried to buy it in 2020.

Council led by veteran Oliu

The Board of Directors of Banco Sabadell is headed by a veteran Josep Oliu75 years old, a manager who has been the visible face of the bank for decades and has been involved in negotiations on many integrations.

The council consists of Oliu as president, Pedro Fontana as vice president, general director of the bank, Cesar Gonzalez-Bueno; independent George Donald Johnston III, Author Kata, Louis Deulofeu, Mireya Ginet, Laura Gonzalez, Alicia Reyes, Manuel Valls and Pere Viñolasand also for Maria Jose Garcia Beato (including another external) and former Minister of Economy David Vegara.

David Martinez He is the only own director, and Mikel Roca and Gonzalo Barettino are not director-secretary and vice-secretary respectively.

Given the proposal, Sabadell is being advised by Goldman Sachs, Morgan Stanley and law firm Uria Menéndez.

Atomized capital without a controlling shareholder

Banco Sabadell is a financial institution with highly atomized capital because, according to CNMV reports, no single investor exceeds 4% of the capital, so there is no controlling shareholder, which could make it difficult for the bank to defend itself in the assumption that a hostile takeover is launched.

Blackrock controls 3.62% of capital; for 3.495% of Mexican investor David Martinez, who entered the bank’s capital in 2013, Fintech Europe adds 3.1% and Dimensional Fund another 3% among other investors.

A bank born in 1881 and a participant in many integrations.

The next week will be decisive to know the future of Banco Sabadell, a company born in 1881 that currently has 236,135 million in assets, 19,213 employees and 1,414 offices.

The bank’s first inorganic transaction was the purchase of NatWest Spain in 1996, and since then it has acquired numerous other businesses: Banco Herrero (2001), Banco Atlántico (2003), Banco Urquijo (2006), Transatlantic Bank of Miami (2006). 2007), Banco Guipuzcoano (2010), Banco CAM (2011), Caixa Penedès (2012), Banco Gallego and Lloyds business in Spain (2013) and finally , British bank TSB, to the United Kingdom United Kingdom (2015).

Uncertainty regarding labor impact

If the integration is given the green light, Banco Sabadell will end its solo history and become part of BBVA, and what will happen to its brand is also in question.

BBVA opened up the possibility of sharing the Banco Sabadell brand in areas where it might have a relevant commercial interest, although when BBVA integrated Catalunya Caixa the brand was initially retained but then eventually eliminated.

The question in the workplace is what impact the BBVA-Sabadell merger will have, as BBVA has already announced that it expects restructuring costs to be $1.450 million.

The possible merger of BBVA and Banco Sabadell would create a financial giant with assets of 986.924 million euros, according to data at the end of the first quarter of 2024.

In addition, the two entities will collectively have 135,462 employees and a network of 7,115 offices. Banco Sabadell currently has 1,414 offices and a total workforce of 19,213 people, of which 13,441 are in Spain.