Why BBVA and Sabadell are arguing over the cost of the merger settlement

Yes, he expressed an idea defended by the council Sabadell about what the cost-synergy ratio will not be 1.8% as implied in BBVA’s proposal.. In his opinion, “no one achieves” savings with a coefficient of at least 3%.

Gonzalez-Bueno He also insisted that, according to his calculations, the effect of Sabadell’s integration with BBVA would be as follows: “significantly higher” than the 30 basis points of maximum quality capital assessed by the bank under the chairmanship of Carlos Torres. and disclosed in the document representing the transaction.

BBVA indicated from the outset that impact calculations had been carried out without taking into account key elements such as the costs of breaking strategic alliances.

Yes, he expressed an idea defended by the council Sabadell about what the cost-synergy ratio will not be 1.8% as implied in BBVA’s proposal.. In his opinion, “no one achieves” savings with a coefficient of at least 3%.

Gonzalez-Bueno He also insisted that, according to his calculations, the effect of Sabadell’s integration with BBVA would be as follows: “significantly higher” than the 30 basis points of maximum quality capital assessed by the bank under the chairmanship of Carlos Torres. and disclosed in the document representing the transaction.

BBVA indicated from the outset that impact calculations had been carried out without taking into account key elements such as costs due to the severance of Sabadell’s strategic alliances with companies such as Amundi and Zurich.. The organization recognized that Since it was a hostile operation and he didn’t have access to the books, he wasn’t able to dig as deep as he would have liked. in capital the consequences that the merger will entail.

But some investment banks made their own cost estimates that were not publicly accounted for by BBVA or Sabadell.

Debt and alliances

government debt portfolio For example, holding until maturity of Sabadell is one of the consequences not assessed by BBVA, Gonzalez-Bueno warned.

Analysts JB CapitalThe potential bill for transferring this fixed income to market prices during the integration was increased to €400 million.. IN AlantraFrancisco Rykiel expected even higher costs, up to 500 millionalthough he considered it “feasible” for BBVA.

Ending alliances with third parties is a million dollar bill that BBVA has not considered.According to Gonzalez-Bueno. Citya recent report calculated cost 1.089 million due to early breakup joint ventures installed with Zurich in bancassurance, with Amundi in asset management and Nexy in payments. These impacts are estimated to subtract a further 24 basis points of capital from BBVA’s CET1 ratio.

More settings

There are other additional adjustments as suggested by Gonzalez-Bueno, citing Update of fair value accounting for all Sabadell assets, outside the government debt portfolio. This process, known as fair valuestrives to harmonize the accounting of both enterprises.

In the event that BBVA carries out a complete revaluation of all loans and deposits of Sabadell during the integration, adjustment account fair value may exceed 3.450 million euros.According to a recent Bank of America report, the total effect of the adjustments was more than 7.1 billion euros (including restructuring costs, goodwill and other items).