Obstacles that prevent BBVA from formulating a hostile takeover proposal for Sabadell

Sabadell’s rejection of BBVA’s offer leaves the next step in doubt. But the fact that the board of directors of the Catalan bank has already decided to maintain an independent course, considering that its proposal “significantly underestimates the Sabadell project”, limits the chances that any new proposal can be considered friendly.

But will such a proposal be successful? This is one of the questions that has been hovering over us all these days regarding an unusual formula chosen by BBVA from the very beginning for the fact that he formulated his interest without prior negotiations with the management of the bank and disclosure of all conditions to the market in a letter addressed to the board of directors of the company, headed by Josep Oliu.

A mode of operation which may be common in Anglo-Saxon markets, but for which there is no custom here, much less in banking. In fact, experts and financial sector sources consulted are convinced that BBVA will not draw an almost virtual red line in the Spanish banking sector

since there is only one precedent for this appeal and it did not have a successful result.

Need to going back to 1987. Then he Bank of Bilbao (today in BBVA seed) launched attack on Banesto (integrated into the Santander group) due to the lack of a merger agreement, resulting in the court vetoed to understand that the offer cannot be made by exchange of shares and that it must be approved at a meeting of shareholders.

The Basque group could make this proposal, confident in severe atomization of the capital Sabadell with the publication of its terms. That it no longer has the solid core it had for decades, thanks to its creation with the support of the Catalan business community, is obstacle to prevent uncoordinated supply of capital.

However, the lack of tradition is aggravated by other obstacles which the Basque group will also have to navigate as a political future, especially in the midst of elections in Catalonia. Despite the BBVA’s nod to Catalonia promising to maintain one of its operational headquarters there, the reaction was contrary to its interests.

From Catalan executive director Economy Minister Natalia Mas said “good news for Catalonia” refusal Sabadell, arguing that the region needs more banks so as not to integrate them.

AND Promotionemployers’ association uniting the region’s business community He joined the defense of the bank’s management. Companies and businesses have become inclined to have more suppliers and not reduce competition. This was a few days ago Valencian Community and the mayor of Alicante, who expressed concern about the integration, which would leave this last place without a tax office located there in Sabadell.

Political “noise” also arose in the ranks of the Council of Ministers, when the second vice-president and minister of labor Yolanda Diaz, warned that such a merger would result in an ERE (employment adjustment) and concentration that would entail “systemic risk”.

“If this fails, it will also It’s inconvenient when they have to see each other at AEB,” other sources add. While still being fierce competitors when it comes to business, financial institutions today must understand the many issues that impact the industry

such as protecting yourself from a potential extension of the emergency bank tax, negotiating an industry agreement with unions, or how to deal with cyber risks. “Confrontation will significantly complicate the climate,” indicate sources consulted.