2024-10-07 12:10:36
Total war between BBVA and Banco Sabadell. The CEO of the Basque entity, Onür Genç, defended on Monday that the proposed operation on the Catalan company is “a textbook operation, ideal for everyone”. A few hours later, his Sabadell counterpart, César González-Bueno, responded: “It is a book that still has many pages to write.” “The operation is not going well and the last pages are yet to be written,” he concluded.
BBVA CEO Onür Genç was much more moderate than González Bueno in his speech at the XV Financial Meeting, organized by KPMG and Expansion. He argued that the logic of the operation is not to reduce the supply of credit to SMEs, but to increase it. “This is an operation aimed at the growth of SMEs,” he said, recalling that the bank hopes, once the takeover bid is completed, to increase the credit by 5 billion euros.
He assured that only 1.5% of Spanish SMEs work with BBVA and Sabadell alone. A figure which in Catalonia rises to 3.6%. This was one of the main doubts that the acquisition raised among Catalan employers and the government. Both BBVA and Banco Sabadell are awaiting the key decision from the National Commission for Markets and Competition (CNMC) on the transaction. In particular if it decides to approve it in a first phase, with small commitments, or if it recognizes competition problems and, therefore, extends the analysis to a second phase. On this aspect, Genç was strict in believing that approval must be obtained in the first phase. “We maintain our belief that there are no competition concerns and that this is a Phase 1 operation,” he said. And he justified this with the methodology used in previous transactions in the sector, in particular the merger between CaixaBank and Bankia, and to the extent that the combined entity will not have more than 22% in any of the products, it will not be a leader and that the resulting shares do not reach the 25% which the EU considers worrying.
With respect to these competition issues, González-Bueno rejected the 1.5% figure provided by Genç, considering that it is based on a limited database, which does not cover all SMEs. And it only counts companies that only work with BBVA and Sabadell and not those that also work with any other entity, so their overlap calculations go up to 40%. Unlike the Basque bank, it believes that the competition should analyze the operation in a second phase, since it is complex and many third parties (such as trade unions, business associations or politicians) want to express their opinion.
González-Bueno was much more combative. He said the operation “makes no sense.” “We have gone from an unstoppable operation, as BBVA stated in Financial timesone that doesn’t do very well within the tracks,” he argues.
In his opinion, an operation of this type requires several elements to succeed and none of them are satisfied. The first is the price, which in his opinion “there is none”. And he mentioned the low bonus, as well as the promises of dividends, which include the distribution of 2,900 million over the next two years, equal to 30% of the bank’s stock market value. “This is a lot, because in 18 months you can have a 30% return, while BBVA now offers you 3%. This is a very high and unparalleled profitability,” he said. As a second element against the operation, he also underlined its hostile nature.
Little by little, the banker raised his tone. It disgraced BBVA to have a capital target of 12%, compared to its bank’s 13%, despite, in its view, a bank being in “less stable” markets. “It’s good that European banks are consolidating, but BBVA is not. “This is an emerging market bank,” he accused and defended that his opponent has fallen 20% since the announcement of the takeover bid and they are up 12%. According to him, due to the collapse of Mexican banks. “We move like Bankinter and they move like Banorte,” he said.
Competition keeps the sword high
Two of BBVA and Sabadell’s main competitors on the Spanish market, CaixaBank and Bankinter, participated in the same forum. The former’s CEO, Gonzalo Gortázar, denied that either of the two banks involved in the takeover bid is in the dark. On the other hand, he underlined that the current moment in the banking sector is characterized by strong and intense competition. “To win you have to fight well, do better, sweat your shirt off,” he said.
On Bankinter’s side, CEO Gloria Ortiz expressed herself along the same lines. “They are competing like before,” he said, or that they are even more active. Ortiz underlined that Bankinter does not compete “to the detriment of anyone”, but that if there are “opportunities” it will “take advantage of them”. He explained that “certainly” there will be customer exits from the two entities at the time of the conclusion of the operation, as usually happens in this type of operation, but “for the moment” he does not appreciate that the banks involved are competing with less intensity .
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