BBVA Presses Ahead with Sabadell Takeover Despite Government Hurdles

In a surprising move, BBVA has decided to continue its public offer to acquire Banco Sabadell, even with government restrictions set to delay any merger. This decision underscores the bank’s commitment to its strategic goals, despite facing regulatory challenges that could alter the timeline for achieving anticipated synergies.

Continuing the Pursuit

BBVA, as announced on Monday, is moving forward with its offer for Sabadell shares. The company’s president, Carlos Torres, informed the National Securities Market Commission (CNMV) that they are persisting. This is occurring despite the government’s condition, which will take more time to realize synergies.

The bank stated that it will update and share all pertinent information once the CNMV approves the OPA brochure. This approval is anticipated within the coming weeks. BBVA is keeping its offer, believing it generates “enormous value” for the shareholders of both entities. This action represents “a unique opportunity” to forge a more competitive and innovative bank in Europe, according to the company.

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“The project creates enormous value for the shareholders of both entities and represents a unique opportunity to build one of the most competitive and innovative banks in Europe.”

—BBVA Statement

The decision to proceed with the OPA is completely supported by BBVA’s Board of Directors. According to recent data, bank mergers and acquisitions have increased by 20% in the last year (Financial Times, 2024).

Government’s Role

The government’s recent authorization of BBVA’s OPA to Sabadell comes with a stipulation. The two entities must remain separate, including their management, for at least three years, potentially extending to five. This requirement significantly impacts BBVA’s initial plan.

The original strategy was to integrate Sabadell into the group, achieving synergies or savings of 850 million euros within the first three years. These savings were projected across technology, personnel, and financial areas. However, the rejection of a merger from the government has led BBVA to consider Sabadell as a subsidiary, akin to Santander’s handling of Banesto for over two decades.

The integration process, often taking a couple of years, and the impact of the bank tax, could increase costs if Sabadell is integrated. Consequently, keeping the Catalan bank as a subsidiary could offer a fiscal advantage. However, the planned 850 million in synergies would be unattainable. BBVA recognizes it will require more time to make these savings a reality.

The agreement from the Council of Ministers prohibits workforce cuts or branch closures related to the operation. This stance does not prevent them if maximizing the value of each entity is the goal.