Sabadell considers move back to Catalonia as BBVA takeover bid looms

The board of Banco Sabadell will on Wednesday discuss whether to move the Spanish bank’s headquarters back to Catalonia.

Sabadell moved its headquarters to Alicante in 2017 due to uncertainty over Catalonia’s independence bid. If successful, this would have ended ECB supervision for the region’s banks.

Sabadell informed Spain’s market supervisor of the meeting via a statement, without giving a reason for the move.

The bank is, however, currently facing a hostile takeover attempt from larger Spanish lender BBVA.

Last year, Sabadell said that BBVA’s bid undervalued its operations, but the bank has also rejected the bid by highlighting its importance to the Catalan economy.

Wednesday’s discussion could therefore be a way for Sabadell to reiterate its loyalties as the politicised merger looms.

Spain’s economy minister Carlos Cuerpo nonetheless told Onda radio station that he was not aware of a link between the potential move and BBVA’s bid.

“This decision makes a lot of sense because the normalisation process that has taken place in Catalonia means that the conditions that led to their (Sabadell’s) departure have disappeared,” he said.

Last year, Salvador Illa of the Socialist Party became head of the Catalan government, ending more than a decade of pro-independence rule.

Government opposition

The Spanish government has shown opposition to BBVA’s bid, arguing that the merger could threaten competition.

Sabadell has a large number of SME clients, meaning that a takeover would increase BBVA’s market dominance. This could potentially be to the detriment of small businesses.

The government has the power to block the merger, although Spain’s Prime Minister Pedro Sanchez told Bloomberg on Wednesday that the state would refer to antitrust watchdogs.

“What I want to see is a strong financial system in Spain, let’s wait and see what our competition authorities say in this regard,” Sanchez said at the World Economic Forum in Davos.

National antitrust body CNMC decided to extend its review of the takeover in November, meaning the deal could be pushed back well into 2025.

The decision to extend the assessment is viewed as a bad sign for BBVA, as it may be required to make greater concessions to satisfy CNMC.

Europe is watching

European officials will be following the bid closely as banking consolidation efforts intensify throughout the region.

High lending costs over the last few years have allowed banks to generate significant profits, increasing their appetite for acquisitions.

Italy’s UniCredit, for instance, is currently building its stake in Germany’s Commerzbank, after expanding its reach in Romania.

UniCredit is also eyeing Italy’s Banco BPM, while France’s BNP Paribas has signed a deal with AXA Investment Managers.

Although big banks could improve Europe’s lending capacity, maintaining healthy competition remains a concern.

Bids have also ruffled political feathers due to fears of job cuts and foreign interference in nationally-significant firms.