BBVA’s takeover bid for Sabadell is walking on a knife edge after the National Markets and Competition Commission (CNMC) extended the study period of the operation to carry out a more exhaustive analysis.
The president of the entity, Carlos Torresdefended until this week that the CNMC would apply the same criteria as to the merger between CaixaBank and Bankia, which has a higher degree of concentration of offices in the two critical areas affected, Catalonia and the Valencian Community. But he was wrong. The CNMC will focus on whether it will drastically reduce the access of SMEs to banking services, as requested by the entity chaired by Oliuwhich will now have the opportunity to present its arguments, as will the regional governments, business organizations or groups that are considered affected.
Furthermore, the Competition Defense Law reserves to the Executive the power to tighten the merger after the conditions imposed by the CNMC. “He is a prisoner of the Government, despite the fact that until recently he boasted of moving forward at any price,” they point out.
The CEO of BBVA, Onur Gençacknowledged this week that “we will not hesitate for a second to withdraw the takeover bid if its value is compromised.” The CEO of Sabadell, César González-Buenoestimated the loss of value of both banks at 9,000 million, “equivalent to a Sabadell,” he said.
Genç and Torres will compete with these figures for their re-election at the next shareholders meeting. A bucket of cold water for the president of BBVA, who after missing the opportunity to buy Sabadell at a knockdown price in 2020, appeared in April at the Conde de Godó Golf tournament, sponsored by Sabadell, to inform its president, that he was going to launch the takeover bid despite his lack of interest in accepting it.
Even so, the only mistake that Torres recognizes today is the moment chosen, on the eve of the Catalan elections, which caused all the parties in the race to come out against the takeover and the Minister of Economy, Carlos BodyI would advise against presenting it. “As long as Salvador Illa remains in the Generalitat, it is difficult for Torres to take over the Catalan bank,” say political media.
But the problems don’t end here. The national and international situation has changed a lot since April and not for the better. Banking sources cite three risk factors for which BBVA is reconsidering the purchase.
1) The new Mexican president, Claudia Sheinbaumdeclared war on Spanish interests after failing to obtain an apology for the conquest from the Spanish authorities. Sheinbaum has an extraordinary tax on foreign banks on the table, which his predecessor already assessed. Bancomer, the subsidiary of the Spanish bank, is the most affected.
Not one of Torres’ premises was fulfilled. Mexico has another tax on the table
2) Furthermore, Trump’s victory has placed Mexico in the crosshairs of his Administration, which is preparing drastic actions to stop immigration and threatens to hinder good economic and commercial relations with the sinking price of the peso, to make matters worse Inri. Moody’s has just lowered the outlook for its rating. If a few years ago it was Türkiye that was the source of concern, now it is Mexico, with the difference that around two-thirds of its income comes from the Aztec country.
3) Finally, the extension of the extraordinary banking tax would greatly penalize the profits of Sabadell, which has most of its activity in Spain. An aspect not taken into account.
The bank is waiting to know the result of the amendments to the vice president’s fiscal package Huntsmanwhich will be seen next Monday. The majority of the Government’s partners are in favor of extending the tax with caveats.
In recent days there has been speculation about the exemption of dividends from foundations that own 100% of banking entities. A tailor-made suit for the “la Caixa” Foundation, which has no signs of success, since Junts demanded under the table that the headquarters of the financial entity return to Catalonia. An option that is not on the table, as its CEO recalled, Gonzalo Gortázarrecently.
Puigdemont’s party is the most inflexible in the negotiations. Although he gave in to the energy companies to defend the chemical hub of Tarragona, he remains firm with the bank. Everything indicates that Montero will only be able to approve a minimum package, which includes placing Companies at 15% and measures to prosecute fuel fraud, the two initiatives supported by the PP. The rest is up in the air.
The PP was tempted to support the Budgets in exchange for aid for DANA
The gesture of support from the PP, announced by its economic deputy secretary, Juan Bravowill allow the Executive to emerge successfully from the situation, which, otherwise, would have had to face a sanction from Brussels for not adopting the directive. The two major parties are coming out very damaged from the war of mutual reproaches waged by DANA to cover up the ineptitude of both the president of the Generalitat, Carlos Mazónas well as the Ministry of Ecological Transformation, which still directs Teresa Ribera.
The Government’s aid, despite the impressive figures (more than 14,000 million), lacks an infrastructure plan to prevent future floods and represents a blow to small businesses.
The impression among those affected by DANA is that half of the aid will have to be returned. Specifically, 40% are credits or extensions of these that require a return. If we except labor measures, only 1.8 billion are direct aid. A ridiculous amount to repair the damage from the biggest flood in centuries. Mazón requested 5,000 million more on Friday.
However, both parties are condemned to understand each other, since if the socialists withdraw support for Mazón’s Budgets, as they threatened after their intervention in the Parliament, the latter will not be able to implement the reconstruction plan. The doubt is whether, in reciprocity, the popular people will support the Executive in more economic measures.
The announcement of an important economic package by Sánchez after the flood in exchange for the PP supporting the Budgets was not improvised. The proposal was on the popular table several days before and opened a lively internal debate between those in favor of accepting it and rejecting it. In the end, it was agreed to discard it, because it opened the door for Sánchez to conclude the legislature, against the harsh statements of Alberto Núñez Feijoo.
Montero has a difficult role ahead of him, since he committed to Brussels to present a tax reform, for which he has no support, and which puts at risk the last two payments of the Next Generation funds, for about 10,000 million.
The vice president’s desperation was evident this week, when, on the one hand, she refused to extend the extraordinary tax on energy companies and on the other, she agreed to eliminate the tax exemption for Socimis and health insurance, which unleashed the wrath of her two main partners. Junts and PNV. A clear demonstration that the Executive does not care about eight or eighty, attacking the market, bypassing legal security or throwing dirt in its own eyes, in the case of SOCIMIs.
The elimination of the tax advantages for these companies, comparable to European REITs, would mark us as the only country that would double tax the income of real estate and would suddenly stop international investment and the supply of housing, which would further catapult prices. A major break. The threat of Merlin Properties and Colonial to move out of Spain, as they did with their Repsol and Cepsa investments, remains pending the final decision.
The Executive’s haste is shown in that none of the initiatives negotiated this week consisted of an economic report, which measures the impact of their entry into force before being undertaken. They improvise on the fly to remain in power.
P.S..- The chaos of the Executive has led to an important goal: the appointment of the former governor of the Bank of Spain, Pablo Hernandez de Cosas general director of the Bank for International Settlements of Basel. De Cos concocted support for his candidacy in secret, which he presented at the last moment so as not to leave time for Sánchez’s Executive to react, as was the case. It is a shame that the most brilliant governor in the recent history of Spain has had to make a living to be appointed without support from his Government.
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