Carlos Torres, the president of BBVA, the entity’s executives and their well-paid external advisers, through incompetence or arrogance – in the coming months it will be possible to specify the contribution of each of the two sins –, have transformed a financial operation into a strategic sector, their proposed merger of a megabank, the one they lead, and a large bank, Sabadell, in a battle of financial power against political power. Despite enjoying the advantage of striking first, not on one occasion but on two occasions, his approach has resulted in single setbacks for his interests. Maybe definitive.
It seems difficult that the public offer for the acquisition of shares (opa) hostile to the former over the latter can come to fruition with the opposition of the central government, the economic world, public opinion and the living forces and fabric business of the two main territories affected by the merger, Catalonia and the Valencian Community.
The blessing of the regulators, the Bank of Spain, which is already preparing for the governor’s handover, and the European Central Bank (ECB), which will only pronounce on the solvency of the operation, not on competition, and which can take it for granted, since the two banks involved already have it left over separately, it is not enough to deal with the wave of rejection that has triggered the approach announced by Torres.
With the current cards on the table and to achieve a smooth exit, Torres will have to maneuver in the coming months to achieve the confluence of two complementary circumstances. First, an agreement with Josep Oliu, the tough president of Sabadell; something that will only be possible by raising the offer for your bank, with cash and not just with papers, BBVA shares. Pact in this climate of open war between the two bankers? In business everything ends up being a matter of price, loot that explains the final turns that should never be discarded.
Second requirement for the successful end of the auction, a change of criteria by Pedro Sánchez, the head of the Government; or else an even stronger script twist, change of president. For either of the two possibilities, the banker from Salamanca would have to offer relevant consideration to the political power.
What is the key to understanding the harsh reaction of the Central Government? What strange spring has activated Carlos Cuerpo, the discreet and measured technician who heads the Ministry of Economy, to launch a bloc against the OPA when he was very cautious in the first steps, when everything seemed more friendly?
Pedro Sánchez and Cuerpo learned that BBVA would launch a hostile offer well in advance on Wednesday night, the eve of the public announcement. A strategic, basic sector of the economy, in which dependence on the protection of the State is a condition of its very existence, would be shocked by the movement of Torres and his people and the Prime Minister knew nothing until a few hours earlier, and this through a rare message from the banker. The same as the Bank of Spain, by the way.
Cuerpo’s first reaction, quite neutral that night, did not yet capture the enormous displeasure of the president. A superb affront to political power that would go unanswered. The realization of the climate in Moncloa would reach the minister the following morning.
An irreverence, moreover, in the final stretch of the Catalan campaign. An attack on Sabadell liable to be interpreted by a sector of the middle classes – and even of the upper bourgeoisie – who will decide the final battle between the PSC and independence and in which both Sánchez and his policy of conciliation through the amnesty are at stake, as a new blow by the centralized power in Madrid against the Catalan economy. Ex-president Carles Puigdemont, the main rival of the Socialists in this campaign, did not have time to approve the idea and compare the deal with Catalonia’s Article 155 intervention in hand.
In reality, Sánchez knew that something was afoot, among other things because from the Catalan business and political world Josep Sánchez Llibre, president of the employer’s association Foment, and Salvador Illa, the candidate of the PSC and winner in pectore of today’s elections according to the demographic perspective, they warned him of the danger for the Catalan economy if the bank of Basque origin launched a hostile bid. Precisely because of that knowledge, the latter two were the earliest to react, very early on Thursday, to the announcement of the hostile bid. The first, with a statement of radical rejection; the second, in an interview with TV3 in which he spoke without nuance against the assault on Sabadell with arguments of an economic nature. Their answers set the tone for the rest of the statements in a chain of political parties, employers, unions and civil entities.
Sabadell, Catalan bank? Since 2017 it has been headquartered in Alicante, with headquarters in Sant Cugat del Vallès (Vallès Occidental), part of its managers reside in Madrid and its goal is to be a major Spanish bank. In fact, the momentous meeting of the board of directors that Oliu convened last Monday and in which it was approved to reject BBVA’s offer – it was not yet a hostile bid – was held in Madrid. A significant choice that did not suggest a debate on the operation in territorial terms. A combination of references that is not easy to interpret. Nor, apparently, for BBVA, which has also ended up opening that front, precisely against the interests of the Spanish Government.
But Oliu is a very active character in Barcelona, ??where he maintains frequent contacts with politicians and the rest of the economic world. And what is also very relevant, the bank continues to have its main center of activity in Catalonia and Valencia, territories where it cultivates a high share of financing to companies, especially SMEs. Its absorption by BBVA would be a problem for many of them. In this sense, Sabadell continues to be a Catalan and Valencian bank, which explains why Carlos Mazón, the president of the latter community, has ardently joined the repulsion of the operation by the president of the Generalitat de Catalunya , Pere Aragonès, despite the fact that Sabadell’s Alicante seat is nothing more than symbolic and the aspirations of that city, like those of Barcelona on the other hand, to become a relevant financial center are minimal.
However, the chances of Sabadell finding a white knight to compete with BBVA and offer better conditions are slim. European banking does not play cross-border operations and in Spain the two potential candidates, Santander and CaixaBank, are not up for the job.
From now on, there will be a long period of up to a year before the takeover bid materializes, that is to say, until the moment arrives when Sabadell’s shareholders choose to sell or continue to keep their shares. But as it was configured at the start, it will not be the tedious and slow march of bureaucratic and administrative machines, stamps and approvals, that will mark the process. The battle of public opinion will be as relevant or more relevant, with an implacable hardness. And also decisive. As long as the circumstances do not change, the attacker has a clear disadvantage.
The Olympus of the masters of the financial universe no longer rules with the unlimited powers of the past. Political considerations are more than just annoying frictions that are easily addressed.
BBVA had the complicity of some large investors, to whom Torres referred when he explained that some relevant shareholders had expressed their interest in the offer. These are financial operators capable of being tremendously ruthless and rude when pouncing on a prey, but who are also aware that going up against a government is bad practice if you invest in many sectors and aspire to receive a good treatment of authorities and regulators.
