The hostile takeover launched by BBVA on Sabadell It is going to be a new twist to banking concentration and it will inevitably keep Sabadell’s more than 11 million clients in suspense, concentrated above all in Spain and to a lesser extent, in the United Kingdom and Mexico. There are months of uncertainty ahead in which BBVA will have to obtain approval from the authorities for its offer, harshly criticized by the Government although possibly liked by the ECB, and the shareholders of Sabadell. Meanwhile, banking operations will continue under a clear premise, the terms of the contracts signed with the bank cannot be modified, regardless of the outcome of BBVA’s takeover bid. If he finally stayed with Sabadell, what was signed in a mortgage would remain under identical conditions, as would the remuneration for a deposit.
But as a result of the union between two banks there always end up being changes in the product showcase offered to the client and in their characteristics. The commercial policy of the acquiring bank usually ends up being imposed, so if the acquired bank up to that point has been more aggressive in its mortgage offering, it may stop being so. Or if you have had a reduced investment fund offer, you can expand it. The savings and investment showcase that Sabadell clients will find if the bank passes into the hands of BBVA will foreseeably be different. What offers would await Sabadell customers in such a case? Would they be more or less attractive than at your current bank? Meanwhile, both BBVA and Sabadell will have to avoid losing customers along the way.
Paid accounts
For now, both banks have active campaigns to attract new customers by signing up for online accounts. Sabadell offers until the end of the month a 6% nominal profitability in the first three months for opening an online account, which begins to pay 2% from the fourth month. The offer is equivalent to a 3.06% APR for a maximum balance of 20,000 euros, to which is added the return of 3% of direct debit bills for electricity and gas. The account, which has no fees or other requirements, also gives access to a free debit card and a credit card, with no issuance or maintenance fees. At BBVA they also have an online account on display with no commissions, although it is not paid. It does allow the return of up to 60 euros of the amount of gas, electricity, telephone and internet bills for one year, as long as 400 euros are kept in the account.
Financial sources indicate that Sabadell’s commercial policy is more aggressive than BBVA’s in retail banking. After all, the entity of Catalan origin has the bulk of its business in Spain and has had to undertake a comeback in recent years to restore profitability and solvency in which business with clients has been key. And the direction has been set by its CEO, César González-Bueno, who took charge in 2021 and who in his long service record includes having promoted ING, a benchmark in online operations and commercial dynamism, in its beginnings in Spain. “In recent years, Sabadell has had a greater need to attract clients. Its commercial strategy is more aggressive, although now it also demands greater ties in return,” explains Antonio Gallardo, head of studies at the Association of Financial Users (Asufin).
Mortgages and consumer loans
Gallardo also alludes to the risk of losing business in the coming months, especially for Sabadell. “There will be clients who do not want to join BBVA and prefer to leave given the possibility that the takeover bid is successful. And others who withdraw savings to another bank if, in the event of integration of both banks, they exceed the maximum savings of 100,000 euros protected by the Deposit Guarantee Fund,” he explains.
Especially sensitive to what may happen with the takeover bid is Banco Sabadell’s business with SMEs. “With the disappearance of Banco Sabadell, “Many SMEs will be left without financing.”, the Catalan employers’ association Foment del Treball denounced when the operation became known. Sabadell has a long tradition of financing Catalan companies, on which it has built a valuable market share of 12.7% in lending to SMEs in Spain, compared to 11.5% for BBVA. In financing for individuals, with mortgages and consumer loans, Sabadell’s market share is much lower – 6.3%, according to the data presented by BBVA in its offer – although its commercial policy in mortgage financing is very active. .
“Sabadell is more aggressive than BBVA in mortgage prices and has a more flexible offer in principle, it refines the conditions that it ends up offering to the client more,” explains César Betanco, from the analysis department of the mortgage comparator Hipoo. And he points out that Sabadell offers a fixed rate of 2.3% on mortgages, compared to BBVA’s 2.5%. At iahorro they explain that “it all depends on the client’s profile, both banks have a similar degree of connection, although BBVA may have a better mortgage offer.”
On its website, regardless of the terms that the client manages to negotiate with the bank, BBVA offers a fixed-rate mortgage with a nominal interest of 2.9% and APR of 4.1% – with direct debit payroll, home insurance and loan repayment insurance -, and a variable mortgage at Euribor plus a spread of 50 basis points, with the same linkage conditions. Sabadell has the mixed mortgage at the forefront of its showcase, with the option of a fixed rate for the first three, five or seven years of the life of the loan, an option that BBVA barely markets. With direct debit of payroll and life and home insurance, the fixed rate in the first five years in the Sabadell mixed is 2.3% nominal and Euribor plus 0.9 the rest of the years, which results in an APR interest of 4.49%, as explained by the bank. The entity also offers in any case the mortgage at a fixed rate in its entirety or at variable interest.
Financing to individuals will be one of the aspects that the competition authorities will have to analyze in more depth. Thus, the addition of BBVA and Sabadelll would result in an entity with a market share in loans in Spain of 21.9%, only behind the 25% of CaixaBank, boosted to first place after the absorption of Bankia. “The bulk of mortgages continue to be granted in Spain by traditional banks. Fintech companies barely grant credit and their activity does not compensate for the loss of competition that banking concentration has entailed in recent years. In consumer credit, diversity has clearly been lost in the banking offering,” they argue from iahorro.
The terms under which a mortgage or consumer loan has been signed do not change in the event that BBVA’s takeover bid is successful. “Whoever is close to closing a loan with Sabadell should not worry since those same conditions would be maintained if the ownership of the bank changes,” they explain from Hipoo. This is what has happened in all previous concentration processes, by virtue of the legal security provided by the signing of these contracts. Changes and surprises can occur in products that are not subject to an expiration date, such as the costs of maintaining a checking account, or in financial services that are renewed each year, such as the cost of home insurance. or the cost of maintaining the debit or credit card.
Asset Management
Banco Sabadell sold its fund manager to the French company Amundi in 2020. The priority was then to obtain resources to improve the bank’s solvency, after which the Spanish entity is now only responsible for the marketing of investment funds, not their management. “BBVA has decided to maintain its manager and has a more complete fund offering than Sabadell, in addition to some best-selling funds,” explain sources in the sector. In any case, financial institutions must offer the client the investment product that best suits their needs and risk profile, regardless of whether it is a brand-name fund or not. And give the client the possibility of contracting the fund of a third entity and not their own, although the powerful commercial machinery that is the bank offices often incline the saver to subscribe to the fund that their entity sells them. With data from Inverco at the end of April, BBVA’s investment fund assets are 50,758 million euros and Sabadell’s is 13,882 million.
The battle for Sabadell’s shareholders has begun and also for its clients, according to banking sources. The months during which the takeover bid will be processed will put Sabadell’s commercial machinery to the test and will also activate the alert of competitors, always on the lookout for dissatisfied clientele who get off the boat in all the concentration processes.
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