It was one of the conclusions that the Sabadell board used to reject the merger with BBVA, before the announcement of the hostile takeover.
The CEO of Banco Sabadell, César González-Bueno, points out that the board of directors on May 6, which rejected the merger offer that BBVA had presented on April 30, concluded that the capital impact of the operation would be "significantly higher" than the 30 basis points that the entity chaired by Carlos Torres estimates.
González-Bueno has pointed out, in his first intervention after the announcement of the merger and the hostile takeover bid by BBVA, that the Royal Decree that regulates Public Acquisition Offers (OPA) of 2007 "restricts greatly" what he can say after the announcement of the takeover bid, but it can tell "what the process was like until the decision was made to reject BBVA's non-binding offer", that is, the events between April 30 and May 9, prior to the announcement of the offer to shareholders.
During his participation in the 19th Banking Meeting organized by IESE and FTI Consulting, he defended that this operation began on April 30 "without prior negotiations" and with a letter received that day by the president of Sabadell, Josep Oliu, who He "immediately" convened the bank's board to convey the contents of the letter, appoint legal and financial advisors and call another meeting for May 6.
The next day, May 1, BBVA publishes the details of the offer, while on Sunday, May 5, the president of the bank, Carlos Torres, sends a letter to Oliu, stating that the offer "had no further scope." ", which was "the maximum possible" and that had already affected BBVA's stock market price by US$6,508 million, receiving "criticism from analysts and investors."
The CEO of Sabadell points out that there was "a lot of debate" in his entity about whether to publish the letter as a relevant fact to the National Securities Market Commission (CNMV) before the leak by 'El Mundo' of the letter. on Tuesday, May 7, at night. "The complete letter was published and, for transparency, we communicated it as a relevant fact the next day," he specified.
González-Bueno continued by explaining the conclusions reached by the board of directors convened on May 6, and which was also attended by Sabadell's advisors, who informed the directors that the assessment of BBVA's offer had to be done "dispassionately, without personal interests; that is, from an absolutely rational point of view."
Furthermore, he has defended that the decision had to be made with "complete" information, in an "impeccable" process and taking into account the interests of the shareholders.
Under these premises, the discussion of the offer took place within the board, which was based, on the one hand, on the creation of value for Banco Sabadell as an independent entity compared to the 16% that the shareholders of the entity resulting from the operation would have, and in the synergies that would occur.
CREATION OF SYNERGIES AND CAPITAL IMPACT
The board of directors considered that the numbers that the entity is considering for the coming months can be achieved and even beaten independently, following the experience of the last three years.
"The first quarter results, which had been announced shortly before [BBVA's merger offer] and which had led to a very strong rise in the stock, had improved the results of the first quarter of the previous year, net profit by 50%, all lines of business had been improved and, in addition, volumes had grown," González-Bueno defended, defending that the budgets drawn up by the management team can be used to value the entity alone and that, in absolutely, "they are inflating themselves."
Regarding the synergies that BBVA considers, of US$ 922 million, and the capital impact that the merger may have of 30 basis points or, in other words, about US% 1,572.8 million, González-Bueno has explained that the board took into account cost synergies, but not "negative commercial" synergies that "could occur, although they are less quantifiable."
However, where the board made a "recalculation" was in the impact of 30 basis points on BBVA's capital ratio. "In the letter that BBVA had sent, a multiple of 1.8 appeared. The board applied a corrective factor and concluded that it would be a multiple of three. Nobody is managing to achieve these synergies with a cost other than three times the savings generated. That is, what we could call, in simple terms, a three-year payback ," he explained.
Furthermore, he recalled that the impact that BBVA estimates does not include the breakup due to joint ventures, especially those that Sabadell has with Amundi in asset management and with Zurich in bancassurance. "I cannot give that figure because it is not public, but it is significant and the council also included it," he detailed in this regard.
Thus, by taking into account these recalculations, plus the adjustments to the fair value of the forward portfolio and Sabadell's own assets, the board of directors concluded that the capital impact of the operation would be "significantly higher" than 30 points. basics that are included in the BBVA announcement.
VOLATILITY
Another aspect that has also been mentioned, and is included in the note rejecting the offer by Sabadell, is the volatility that BBVA shares were experiencing on the Stock Market, since the operation involves an exchange of shares, just as collects in the hostile takeover bid.
"The board expressed concern about the fall in the price of the shares with which, in principle, Banco Sabadell will be paid," González-Bueno explained. In addition, the entity's governing body also took into account the "social issue", which is the impact on employees and customers.
In this regard, the CEO of Banco Sabadell has explained that he is in contact with the workers and has expressed the "concern" that exists.
"It is evident that when there is an offer on the table that proposes a 41% reduction in costs, people rationally think that it will affect them more than others. Obviously, that generates concern ", he stated.
