8 October 2024
The Chairman of Banco Sabadell, Josep Oliu, has stated that “it is clear that the merger of BBVA and Sabadell would have a negative impact on companies, above all on SMEs”, because it would hinder their access to credit and services by producing a high degree of concentration.
During his speech at the 23rd Banco Sabadell Foundation Award for Economic Research, which took place in Oviedo, Oliu stressed that the negative effects of a potential merger operation would particularly affect SMEs located in northern Spain and in the Mediterranean region, especially in Catalonia and the Valencian Community.
Oliu stated that limits on concentration are “a matter to be discerned by the competition regulators, considering whether a merger operation could significantly affect the degree of market oligopoly faced by companies or citizens, in Spain or in specific regions”.
In this respect, he reiterated that size is a matter of importance in all sectors because “concentration can lead to cost savings, but also to market dominance”.
The Chairman explained that consolidation may produce stronger banks with better risk diversification and greater economies of scale if it occurs at European level, but he warned that all these arguments lose their weight if, in order to achieve that, we create market concentration problems at a national level.
In any event, the Chairman of Banco Sabadell stated that there are still barriers to European consolidation because there is no European deposit guarantee scheme (DGS) in place. “We are sure that Europe will succeed, as it must, in reaching an agreement to implement a European DGS and the appropriate related resolution mechanisms”, he added.
Concerning BBVA’s hostile takeover bid, Oliu stated that comprehensive information is being made available to Banco Sabadell’s shareholders, as they are the ones who must decide. He also stressed the volatile nature of the proposal. This uncertainty about the offer arises, he explained, because it is conceived as a share exchange and also because it has been put forward by a bank that has “substantial exposure to emerging economies which, for better or worse, are therefore detached from the Spanish or European markets”.
The institution’s Chairman also pointed out that in transactions of this kind, and in the one envisaged by BBVA, “execution risks can dilute the perceived share premium in just a few months, above all when it concerns a transaction that is contested by most of the social players who will have to deal with its consequences”.
BBVA’s offer initially proposed an exchange of 1 one newly issued BBVA share for every 4.83 shares of Banco Sabadell, which at the time represented a premium 30% above the average Banco Sabadell share price during the three-month period leading up to 29 April. Subsequently, the exchange ratio was adjusted to 5.0196 ordinary shares of Banco Sabadell, following dividend distribution, plus 5.7 euro cents per share in cash. As Banco Sabadell’s share price has since been improving while BBVA’s has dropped, the premium has been falling and at market closing this Tuesday stood at 2.85%.
Economic Research Award granted to Dr Eduardo Dávila
Josep Oliu also highlighted the impressive contribution of Dr. Eduardo Dávila, who received the Banco Sabadell Foundation Award for Economic Research at the 23rd edition of these awards, emphasising, in particular, his work in the area of financial regulation and encouraging him to continue to deepen his analysis in this field in order to continue to contribute to building a sound and robust financial environment.
The award ceremony took place this afternoon at the branch HQ of Banco Sabadell in Oviedo and was attended by Sonia Mulero, Director of the Banco Sabadell Foundation, and Borja Sánchez, councillor of Asturias for Science, Business, Training and Employment, among other participants.
Eduardo Dávila holds a Bachelor’s degree in Economics from the Pompeu Fabra University and a PhD in Economics from Harvard University. He is currently also Professor of Economics and Finance at Yale University, and a researcher at the National Bureau of Economic Research (NBER). He was previously Professor of Finance at the NYU Stern School of Business.
His research work focuses on finance and macroeconomics, with particular emphasis on policy and welfare issues. Among other topics, he has studied pecuniary externalities, taxation on corporations and financial transactions, and the optimal design of financial regulations and monetary policy.
The Banco Sabadell Foundation Award, created in 2001, is a boost to the career path of young researchers and a seal of excellence for their work.
Together with the awards for research in Biomedicine and in Science & Engineering, which were presented in July for research in the fields of fertility and climate change, as well as the Marine Sustainability award to be presented on 5 November in Alicante, these awards represent Banco Sabadell Foundation’s commitment to recognising top-tier research talent and highlighting the impact of their lines of research on people, in terms of progress and the wellbeing of individuals.
