Background on BBVA and Sabadell
BBVA, Spain’s second-largest bank with a strong presence in Latin America, announced its interest in acquiring rival Sabadell over a year ago. Sabadell, the fourth-largest bank in Spain with 20 million customers, has been opposed to the merger due to concerns about its branch network and employment. BBVA, founded in 1857 with over 78 million customers across 25 countries, has a significant Latin American footprint, particularly in Mexico.
Government’s Decision and Conditions
The Spanish government has approved BBVA’s takeover of Sabadell, but with strict conditions. According to the Minister of Economy, Carlos Cuerpo, both entities must maintain separate legal status and financial autonomy for at least three years. This decision aims to ensure continued high levels of financing for businesses and consumers while preventing drastic staff reductions and branch closures.
The government reserves the right to extend these conditions for an additional two years after three years, citing “general interest criteria.”
Reactions and Opposition
The Spanish government, led by Pedro Sánchez, could not block the takeover but had not formally approved it until now. The Competition Regulator (CNMC) and the European Central Bank (ECB) have given their consent for the merger.
Sabadell’s management has been actively dissuading shareholders from accepting BBVA’s offer, asserting that the bank can generate more wealth independently. They have increased shareholder payouts to €3,300 million by 2024-2025 from €846 million in the previous two years and moved their headquarters back to Catalonia.
Sabadell has received interest from investors for its British subsidiary, TSB, as a countermeasure to BBVA’s offer. However, BBVA’s president, Carlos Torres, believes the timing is not right for selling TSB and insists that the takeover should proceed, stating that the decision now lies with Sabadell’s shareholders.
Key Questions and Answers
- What is the nature of the approved takeover? The Spanish government has approved BBVA’s acquisition of Sabadell, but with conditions that both banks remain separate for at least three years.
- Why are these conditions necessary? These conditions aim to maintain high financing levels for businesses and consumers while preventing significant job cuts and branch closures.
- Who opposes the merger? Sabadell’s management, major trade unions, and the extreme left-wing party Podemos oppose the merger due to concerns about job security and branch network stability.
- What is BBVA’s strategy to proceed with the takeover? BBVA believes that Sabadell’s shareholders should accept the offer, as the bank can generate more wealth independently. They have increased shareholder payouts and moved their headquarters back to Catalonia.
- What is the current status of Sabadell’s British subsidiary, TSB? There has been interest from investors in acquiring TSB, but BBVA’s president believes it is not the right time to sell.
