Inside the story of the crisis: Oliu asked Torres to wait two years to propose a merger between Sabadell and BBVA | Companies

The procession from BBVA to Sabadell has been inflated over time, like many other relationships. Contacts took place throughout April. At least one was in person between Carlos Torres and Josep Oliu, presidents…

The procession from BBVA to Sabadell has been inflated over time, like many other relationships. Contacts took place throughout April. At least one was in person between Carlos Torres and Josep Oliu, presidents of both entities. On the one hand, this meeting is given all the seriousness and is given a status letter. On the other hand, this will simply be an interaction after a banking association meeting. Sources familiar with the situation explain that despite the agreement between both parties regarding the convenience of the transaction and the need to integrate enterprises in accordance with the requirements of the European Central Bank (ECB) to increase scale, there was a radical difference in timing. Sabadell believes that he has his own project that needs to be developed. “The bank has two years of individual experience before it comes to the negotiating table,” the Catalan said. BBVA urgently needs a wedding.

Sources close to both organizations agree on a key element of this conversation. Oliu seemed much more elusive than in 2020, when both sides were close to reaching an agreement. The Catalan, an experienced banker with more than 74 years of experience, was lured by Torres with an honorable resignation. BBVA has withdrawn a three-year-old proposal that would have included three Catalan bank executives on the board of directors and retained the privileged position of vice president so that Oliu could end his career with honors. Of course, the role of those responsible for the successful progress of the enterprise remained in question: from CEO Cesar Gonzalez-Bueno to CFO Leopoldo Alvear, bypassing the rest of the management team.

Oliu showed strength and made it clear that he was not going to beg from the tenants of La Vela, the headquarters of the BBVA corporation. The data supported him. Other sources interviewed disagree. They believe that Oliu made it clear from the very beginning that Sabadell has convincingly proven that he only has a future. His strategy at this stage was to “hold” Torres and delay the deal. They associate a two-year deadline with this. Torres tried to limit the calendar somewhat so that Oliu would not be delayed. not for an indefinite period translation.

The BBVA President set a date: April 30. It was about making the first suggestion and identifying opportunities for improvement. In 2020, Sabadell made a move whose price was just 20% of its book value and became the focus of analysts’ attention. Bringing in Cesar Gonzalez-Bueno as CEO after the merger attempt failed not only created value and changed the bank, but also boosted its self-esteem and sense of having a project of its own. Moreover, in 2024 the initiative came from BBVA. With the American project exhausted and too much risk accumulated in developing countries like Mexico and Turkey, Sabadell radically improves his story and takes it off the screen. However, a leak of contacts on the eve of the decisive meeting shook the process.

The choice of the last day of April was not accidental. A day earlier, BBVA presented its results for the first quarter, and the previous week – on April 25, two days after the Sant Jordi festival – Sabadell did the same. The law limits the movements banks can make within 15 days before reporting results to ensure accounts are not falsified.

The impressive figures presented by Sabadell caused nervousness in BBVA. After a record year from January to March, the Catalan bank earned 308 million, 50% more than in the same period the previous year. The markets erupted in euphoria and Sabadell arrived for a scheduled meeting with BBVA after the stock market rose more than 6% in the three trading days between the two meetings. Every penny Sabadell made in the stock market made the La Vella offer less interesting, given that it was all stocks and its attractiveness changed minute by minute as the prices of both companies rose.

When April 30th arrived, tensions were already very high. “It has emerged: BBVA, the Spanish banking giant, is in the early stages of working with advisers including JP Morgan on an offer to buy all the shares of Sabadell, its Spanish banking rival and owner of UK TSB, in what would be one of the sector’s biggest transactions in years.” . BBVA soon acknowledged the news in a corresponding fact sent to the National Securities Market Commission (CNMV), and later Sabadell admitted that it had received an “indicative written proposal” on the merger at 13:43.

A meeting between Torres and Oliu scheduled for that day was immediately cancelled. Sabadell was in no hurry to answer. He hired advisers and delivered his verdict only a week later. He believed that the offer of one BBVA share for every 4.83 Sabadell shares undervalued the bank.

There are many theories circulating in the power centers of financial Madrid about who is responsible for the leak. Those surrounding BBVA point to Sabadell, who used his British connections through the British TSB to blow everything up. On the Sabadell side, they point out that the leak actually took them rather by surprise. Bank officials denied the deal until it became apparent and the bank was forced to suspend meetings with investors scheduled for next week. Instead, they see BBVA as an attempt to interrupt the bullish trend in the stock market.

Torres and Oliu haven’t seen each other since that first date in mid-April. Since then, their relationship has been purely epistolary. Torres sent him his merger proposal by letter and then last Sunday night by email, which Sabadell eventually made public, assuring him he had no intention of improving the proposal. Oliu responded to both with a public statement in which he rejected the proposal. Torres then decided to go all out with the hostile takeover that took place on Thursday and has rocked the financial and political landscape in Spain. Sabadell responded by charging that the offer violated takeover rules.

All this comes in the final stages of the campaign for elections in Catalonia on Sunday. Carlos Torres admitted at a press conference on Thursday that now is obviously not the ideal time for a movement of this magnitude. But he also believes that political tensions do not appear to have subsided in the days following the election. I had to act quickly.

The relationship not only between the two banks, but also between the executives appears to be completely broken. This is something very unusual for the Spanish financial sector, especially for the two organizations that sit at the same table in the sector’s employers’ association, the AEB. They are forced to understand each other in this forum for the good of a sector whose reputation is still in tatters and they are still locked in a fight with the government over the bank tax.

The period ahead until a decision on a takeover bid is made will be long, and it is highly likely that the two executives will see each other again in these months, if only because of commitments. One of these chance encounters may provide the spark that allows them to return to the negotiating table and ultimately find an agreed upon solution. Torres left some doors open. At the analyst conference, he did not specify whether he was still considering adding Sabadell members to his board of directors, with a very Catalan expression: “now is not the time.” In both a conference call with analysts and a subsequent press conference, he praised Sabadell’s recent departure: “The bank is in much better shape, with a much stronger balance sheet.”

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