Will BBVA back down?
Will the conditions imposed yesterday by the government on BBVA's takeover bid for Sabadell be sufficient to discourage the Basque bank from proceeding or to dissuade the latter's shareholders from selling their shares?
This was the question that Junts, one of the Catalan parliamentary partners of the Executive, asked itself yesterday after learning of the measures announced by Economy Minister Carlos Cuerpo. And this will be its criterion when it comes to giving credit to Pedro Sánchez's capacity for political action, a judgment that will ultimately determine how he votes in Congress.
The Corps' appearance after the Council of Ministers meeting that approved the new requirements had both a political and financial nature. It will never be known whether the politicization of the takeover bid would have been avoided if the bank chaired by Carlos Torres had postponed its announcement for three days, thus avoiding being the center of attention in the final stretch of the last Catalan election campaign. Perhaps the script wouldn't have changed much. But the reality is that the operation has always evolved under that cloak from the very beginning, and the fate of the financial investment in Sabadell has already become one of the main political and economic power struggles of the legislature.
Government partners wonder if this will help stop the operation.Yesterday, the body had the difficult task of announcing stipulations that respected the legal framework, that neither encroached on the powers nor questioned the role of the regulator, the Competition Commission, and that at the same time addressed an explicit political commitment from the Prime Minister to Catalan nationalist forces and the business community, who were absolutely opposed to the operation.
Read also Sabadell: the game continues Jordi Juan
Two measures stand out from the rest of those approved yesterday by the Executive. The preservation of employment, the cash cow of most bank mergers, and the obligation to maintain the Catalan bank's financial and legal independence and management autonomy for at least three years, and possibly up to five.
This last point has unavoidable political implications. Initially, during the period in which this measure is in effect, Sabadell would remain a bank headquartered in Catalonia, with its decision-making centers and executives in Sabadell. Although the survival of this model beyond those three or five years is not guaranteed, it leaves the door open to new scenarios. But experience also attests to the ability of financial powers to circumvent legal impositions through practical action, changes in economic reality, and the complexities of the financial world.
Although there are precedents for bank acquisitions that didn't translate into mergers until decades later—Emilio Botín's Santander acquired Banesto in 1994 and didn't absorb it until 2012—it's no less true that this occurred at a time when the implications in terms of costs and capital and solvency ratios were completely different, much less significant. The economic consequences of not merging are now different, more onerous, according to experts.
Carlos Torres and Josep Oliu
Dani DuchThis condition also has other implications. Josep Oliu, the combative president of Sabadell, has been advocating for these long months that the government should make it clear at the moment it makes its procedural pronouncement, that is, yesterday, that it was against the merger, not for three years, but indefinitely. According to the Catalan banker, clearing up this uncertainty could serve to further discourage the shareholders most inclined to participate in the takeover bid. Without a merger, the Sabadell president reasoned, the return for shareholders who switched shares would be much less clear and much more speculative.
Yesterday, the body partially accepted the Valle del Cauca banker's proposal, but without saying so explicitly. Moreover, it made it clear that the government's decision on the merger would have to come later, provided the takeover bid was successful and BBVA submitted a request. For now, it was only a matter of the terms of the takeover bid.
But even so, the Minister of Economy has acted prematurely and vetoed the merger outright, allowing Oliu and his CEO, César González-Bueno, to use a more just argument at a particularly critical moment in the battle. Yesterday, he asked Torres to detail the economic effects of implementing the measures imposed by the government.
The future of the operation is now in the hands of BBVA. Torres's team made no progress yesterday. Their main focus should have been on their own shareholders, to whom they must explain the meaning of the new terms and their impact on the project.
lavanguardia
