WEBWIRE – Friday, July 5, 2024
With 96 percent of votes in favor, the shareholders have given their overwhelming support to the capital increase needed to extend our offer to Banco Sabadell shareholders, BBVA Chair Carlos Torres Vila said. During his speech, he said that this combination will allow the bank to gain scale and undertake the necessary investments in technology required to compete at a global level. Today marks a very important milestone to move ahead with the most attractive project in European banking, he underlined at the Extraordinary Shareholders Meeting this Friday in Bilbao.
This capital increase represents a major milestone, and one of the necessary steps that are part of the offer to Banco Sabadell shareholders, whichBBVA announced on May 9th. Quorum for the extraordinary shareholders meeting stood at 70.75 percent, reaching record levels.
In the words of Carlos Torres Vila, We are fully confident in the success of this transaction, which represents a clear commitment to Spain and its SMEs. The combination with Banco Sabadell will create a stronger, more profitable bank with greater capacity to support families and businesses in their projects for the future.
This combination is positive for all stakeholders.BBVA shareholderswill obtain high returns on their investment, with limited capital consumption.Banco Sabadell shareholderswill receive a highly attractive premium and a 16 percent stake in the bank resulting from the merger. Furthermore, everyone will benefit from BBVAs shareholder distribution policy, which entails payouts of 40 to 50 percent of profit, and the banks commitment to distribute any excess capital over 12 percent.
In addition,customerswill have access to a better range of products, andemployeeswill have more opportunities for professional growth. The resulting bank will have a greater capability to grant credit, with an additional 5 billion per year in loans to families and businesses, thus contributing to the well-being and economic progress ofSpanish society. There would also be a larger contribution via taxes. With this transaction we are increasing our commitment to the regions with the strongest presence. We will retain the corporate center in Sant Cugat, while reinforcing our support to the scientific, business and cultural sectors in those regions, he said.
We are confident that this offer reflects a sound and compelling strategic rationale, with a positive impact on all our stakeholders, said the BBVA Chair. For that reason, BBVA has wanted to give Banco Sabadell shareholders the power to choose, which they will be able to do once the acceptance period opens. We expect them to appreciate the strategic sense of this transaction and decide to participate with us in this great project for the future. In this regard, he underlined that we believe that the process will move forward favorably within the planned timeframe.
The combination of BBVA and Sabadell, the most attractive project of the European banking sector
In his speech Carlos Torres Vila took stock of the factors that have led to BBVAs success story: the franchises, leaders in profitability in attractive markets and its pioneering strategy in digitization and sustainability, which has been fundamental in BBVAs solid financial results, and its unique combination of growth and profitability vs. its European competitors.
One additional driver of this success is our capital allocation discipline, consistently guided by our focus on creating value for our shareholders, he emphasized. The BBVA Chair stressed that, over the last decade, the bank has divested about 16 billion in markets where it did not have sufficient scale, such as the U.S. or Chile, or lacked the necessary attractiveness, such as Paraguay. These two characteristics, scale and market attractiveness, largely explain the profitability on invested capital. And we have allocated part of the capital obtained from those divestments into options with greater capacity to create value, such as our franchises in Mexico, Turkey or Spain. In fact, the offer we have presented to Banco Sabadell fits within this capital allocation framework, he stressed.
In his opinion, this is the most attractive project in the European banking sector. Carlos Torres Vila considers that, together with the profound digitization of the financial sector, we are facing an unprecedented wave of disruption. In this regard, he considers that technology-related costs, which have increased significantly in recent years, will continue to grow on the back of the need to invest in digital platforms, cybersecurity or artificial intelligence. Scale will be increasingly more relevant: In the combination with Banco Sabadell we gain scale and dilute fixed costs across alarger customer base and higher volume of business, while gaining efficiency and offering better products and services to our customers at more competitive prices, he said.
Furthermore, this transaction strengthens our position in Spain, an enormously attractive market for investment, with good economic prospects, high profitability for the banking sector, and a need for significant investments, especially to address decarbonization projects.
In this context, Banco Sabadell represents a great opportunity. It is a high-quality franchise with a very positive performance of its financial metrics in recent years, he summarized. Moreover, the transaction involves combining two highly complementary businesses, reinforcing ourcommitment to SMEs, he emphasized.
Carlos Torres Vila stressed that we are the bank that most supports the growth of businesses. Specifically, in the first four months of the year, BBVA increased its customer base, adding more than 51,100 self-employed, and small and medium-sized businesses (which represents a 10 percent growth yoy). We want to combine our experience with Sabadells and build together the best possible bank for these businesses, he said.
In conclusion, the BBVA Chair pointed out the banks experience from previous acquisitions, which endorses us and allows us to trust in the success of the integration”
Following this initial milestone, the offer to Banco Sabadell shareholders is subject to the required regulatory approvals and to the acceptance of the offer by Banco Sabadell shareholders, representing a majority of the banks capital stock. Once BBVA acquires a stake in Banco Sabadell of 50.01 percent or higher, it plans to merge it with BBVA. This merger is subject to the corresponding regulatory approvals.
Pro-forma Basel IV, subject to regulatory approval.Statement of non-opposition by the European Central Bank (ECB) and approval by the Spanish regulator CNMV.Approval by the Spanish Ministry of the Economy, Commerce and Business.
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