BBVA Hires Lobbyists to Win Over Spanish Government on Sabadell Deal

Jorge Zuloaga
·2 min read

(Bloomberg) -- Banco Bilbao Vizcaya Argentaria SA has mandated a public relations firm to help it overcome the Spanish government’s opposition to the lender’s hostile bid for rival Banco de Sabadell SA.

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The country’s second-largest bank has hired Kreab, according to people familiar with the matter. The company’s assignment is to help sway the public and government in BBVA’s favor, they said asking not to be identified discussing private information.

Representatives for BBVA and Kreab declined to comment.

The mandate underscores the role of public opinion in a takeover battle that has gripped the nation. Spanish Economy Minister Carlos Cuerpo has said the deal would hurt competition in the country, while politicians in Sabadell’s home region Catalonia have raised concerns that it would weaken the local financial industry.

Earlier this month, BBVA made an offer directly to Sabadell shareholders in a move that became a political issue as it happened just a few days before elections in Catalonia. BBVA Chairman Carlos Torres has suggested the Spanish government would likely soften its stance after the elections, which took place on May 12.

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Sabadell — named after a town near the regional capital Barcelona — has its operational hub in Catalonia, even though it moved its fiscal headquarters to a neighboring region when Catalonia was trying to break away from Spain in 2017. Many investors within its large base of retail shareholders have ties to the independent-minded region, Bloomberg has reported.

The lender has more than 200,000 individual shareholders and 99% of them own only tiny stakes, according to its website. Sabadell’s 24 largest investors own 47% of the bank between them.

A merger of BBVA and Sabadell would create a new Spanish banking giant with a joint balance sheet of more than €1 trillion ($1.1 trillion) in assets. The market capitalization of the combined entity would be close to €70 billion and approach the valuation of Spain’s largest lender, Banco Santander SA.

BBVA said in an investor presentation that the combined bank would have a “reinforced commitment to the social fabric” in the regions where it operates. It has also vowed to keep a head office in Sabadell’s current main office location in Sant Cugat, another Catalan town near Barcelona.

While regulatory approvals for the deal are up to the European Central Bank and local Spanish agencies, the government has the power to veto the legal merger. Continued opposition by Madrid to the Sabadell takeover despite acceptance of the offer by a majority of lender’s shareholders could leave BBVA with a controlling stake in the smaller bank without the ability to consolidate it.

(Adds details about shareholders in seventh paragraph and about necessary approvals in final paragraph)

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