Any merger implies breaking the agreements that banks establish with real estate companies, wealth managers or insurance companies. These agreements have been very frequent in the sector because they are a way of achieving short-term income (to compensate for the fall in interest rates), although in the long run the commissions generated are lost.
In the case of the possible BBVA-Sabadell merger, there could be a lot of money involved in these agreements. According to a report from Barclays, breaking Sabadell’s agreement with the wealth manager Amundi (which has only been in operation for a few months) and with the Allianz insurance company would mean the payment of 740 million. The amount of the transaction amounted to 430 million euros. Sabadell secured a profit that could reach 30 million euros, depending on how the business evolved, as reported last January. The operation offered Sabadell a capital gain of 351 million euros net of taxes, as reported to the CNMV, with which the entity chaired by Josep Oliu reinforced its capital position by 43 basis points (Common Equity Tier 1 ratio fully loaded).
BBVA runs the risk of assuming a cost of about 1.7 billion if it decides to break the lease contract for nearly 700 offices with Merlin Properties, since the eventual merger with Banco Sabadell would entail the closure of 1,232 branches of the combined group, according to Barclays. It currently pays the Socimi about 79 million annually for the rental of almost 700 offices, with a lease agreement that expires in 2040.
The only way that BBVA would have to close the branches would be by repurchasing them from Merlin Properties, as this is stated in the agreement. This analysis says that five employees would be laid off per closed office, which would lead to the departure of 6,160 workers, 13% of the total.
The rating agency Moody’s estimates that the merger would lead to a market share of 22% in system resources, compared to 15% for BBVA and slightly below CaixaBank-Bankia, with 23%.