26 September 2024
The CEO of Banco Sabadell, César González-Bueno, has assured today that the entity's shareholders will have a recurring and sustainable long-term remuneration project, thanks to its excellent profitability prospects, its well defined strategy and its minimal exposure to high volatility markets. To start with, the bank will deliver to its shareholders in the next 18 months an amount equivalent to around 30% of its stock market value.
At a conference organized by Bank of America in London, the chief executive of Banco Sabadell and the financial director, Leopoldo Alvear, underlined the Group's firm commitment to generating value for its shareholders, who will receive 2.9 billion euros from the results for 2024 and 2025, which means 53 cents per share.
“In addition, our compensation commitment, which is based on our level of recurring profitability, has the potential for upward improvement due to the update of our RoTE forecasts,” said the CEO.
In this sense, leaership has explained that the outlook is positive despite an environment of lower interest rates, since 60% of the mortgage stock is tied to a fixed rate and, therefore, will not be affected, and at the same time, this new context will allow increased credit in SMEs and companies, allowing for greater corporate investments and greater capital expenditure.
In the United Kingdom, positive growth in the loan portfolio is expected in 2024. Likewise, margins at TSB will be supported by the rate hedges (caterpillar) and a solid strategy, which will lead the subsidiary to contribute to the Group's accounts in 2025, 2026 and beyond.
Unprecedented hostile takeover
Regarding the hostile takeover bid by BBVA, the CEO noted that over the last 20 years in Spain, there are no precedents of unsolicited takeover bids for 100% of the target’s capital, and has emphasized the high risk of executing the transaction, both due to the difficulty in obtaining all the authorizations and the shareholder support necessary to carry it out, as well as the long period that it would entail.
Specifically, González-Bueno has warned that, first of all, this offer does not have an affordable price, since it is currently 11% lower than the one initially offered and that it was already rejected by the Board of Directors of Banco Sabadell for undervaluing the entity and its future prospects. In addition, he has stressed the volatility of the offered price, given that it is an all-share offer with no cash component so is dependent on the price of BBVA, which in this offer period has plummeted by up to 21% at various periods.
Secondly, he explained that because this is a hostile takeover bid, the analysis by the Competition Authority is very complex and takes a long time. And he stressed that there is no precedent in CaixaBank and Bankia merger, given that it was a friendly deal, and that the damage to the SME business was not as significant as it would be in Sabadell’s case.
“Once Phase 1 is completed (which it is currently in), it is most likely that the CNMC will move to Phase 2 and, automatically, then move to Phase 3 - which includes the Spanish Government, who would decide whether to tighten, maintain or soften the conditions," said the Sabadell CEO, stressing that Banco Sabadell and BBVA are two entities with great relevance in SMEs, a segment of crucial importance in Spain as it represents more than 60% of the Gross Domestic Product (GDP), which would be greatly affected by reducing competition in the sector.
The only way to maintain acceptable levels of competition after this transaction would be to generate the appearance of a new competitor, which is very complex because to do so it is necessary to carve out the business of Banco Sabadell and sell it to a competitor, said González-Bueno, who referrenced the purchase of Banco Popular by Banco Santander as an example of the damage that this transaction could cause for SMEs. In that case, credit to companies of the merged Santander Most Popular was extraordinarily restricted, he said.
Regarding the difficulties of the process, González-Bueno also placed special emphasis on the fact that "BBVA has been changing the information that it has transferred to the market about the transaction", such as the synergies that it would obtain in the probable scenario that the Ministry of Economy did not approve the merger, the real capital cost of the transaction whether there was a merger or not, the number of branches that it intends to close and the number of employees affected, among other data.
