Sabadell claims that BBVA has mismeasured the costs of the merger

Banc Sabadell considers that BBVA has prepared its merger project “in haste” and has miscalculated the integration costs of both corporations. This message was the main one launched this Thursday by its CEO, César González-Bueno, in the first public intervention by a bank executive since BBVA launched its hostile takeover bid last week. He did it at a conference organized by IESE and FTI.

In its approach, BBVA estimates the restructuring costs at 1,450 million euros and the synergies at 850 million. It is a ratio of 1.7 times. However, Sabadell’s board of directors estimates that the restructuring cost would be three times higher than the synergies, that is, 2,550 million euros. There is a difference of 76% or 1.1 billion euros.

This circumstance would disrupt the main parameters of the operation. The loss of solvency of the merged group, which BBVA estimated at 30 basis points, would be greater than expected, and that would also have a downward effect on the share price of the entity launching the takeover bid. As the offer is in shares and not cash, a decline in BBVA’s price would make it less attractive for Sabadell shareholders.

Gónzalez-Bueno also warned that the offer does not mention the cost of the foreseeable breakdown of alliances between Sabadell and companies such as the management company Amundi, the insurer Zurich or the car rental company ADL. “All this leads to the conclusion that the impact is significantly greater than 30 basis points,” he stated when referring to solvency.

The IESE meeting brought together executives from Santander, Sabadell, CaixaBank, Bankinter and Abanca. No BBVA representative attended, despite the fact that its CEO, Onur Genç, appeared on the program last week.

The expected confrontation of speeches between the managers did not take place, but BBVA did react to González-Bueno’s statements. “All the figures reported by BBVA, including the estimated restructuring costs of 1,450 million euros before taxes and the estimated impact on CET1 of 30 basis points, have been calculated with the utmost rigor, as we do in all operations,” state the bank sources.

“We respect that the CEO of Banco Sabadell defends the decision his board made in rejecting BBVA’s proposal,” but “now it is the shareholders who have to speak out” about the takeover bid, they add from the entity chaired by Carlos Torres.

The CEO of Sabadell also reported this Thursday of the “concern” of the bank’s staff “about losing their jobs.” It is “rational” thinking when “there is an offer that states that a 41% cost cut must be made.” This is what the manager described in his speech as “the social issue of impact on employees and customers.”

Of the front-line banking executives who paraded through the day, there were not many reflections on BBVA’s hostile takeover bid. Juan Carlos Escotet, president of Abanca, which is considered an active agent in the banking concentration process, assured that “there continues to be a level of competitiveness in banking that prevents price distortions.”