(Bloomberg) -- BBVA SA and Banco Sabadell SA clashed over whether the proposed takeover of the smaller lender will hurt the provision of banking services in Spain, just weeks before the country’s competition authority is set to weigh in.
BBVA expects the deal to go through without “structural remedies” from the watchdog known, by its Spanish initials CNMC, Chief Financial Officer Maria Luisa Gomez-Bravo told Bloomberg TV on Thursday.
Less than an hour later, Sabadell Chief Executive Officer César González-Bueno shot back, telling Bloomberg TV that the competition issues are “very, very significant” and the CNMC will probably extend its review of the deal.
The authority has said it will make a decision by mid-November. Approval by the body would be the last major step for BBVA before it takes the tender to Sabadell’s shareholders. BBVA is fully known as Banco Bilbao Vizcaya Argentaria SA.
The comments show how tensions are running high in the first hostile takeover battle in European banking in decades. The two lenders also touted the strength of their respective quarterly earnings as they each seek to win over shareholders to support a deal or an independent future for Sabadell.
“It makes a lot of strategic sense,” said Gomez-Bravo. “We believe there are no competition issues, because we’re not going to be the largest player in the market. The market in Spain is very competitive.”
Sabadell caters to one in two of Spain’s small and medium-sized companies, so “the fact that we would disappear would affect significantly competition,” said the firm’s CEO.
Best Efficiency
The executives also clashed on the best outcome for investors.
Gomez-Bravo cited the potential accretion to earnings per share as as well as €850 million ($922.9 million) of planned cost savings. She said BBVA’s 38.9% cost to income ratio is “the best efficiency ratio of the largest European banks.”
Sabadell meanwhile says that its plans to return €2.9 billion, an amount equivalent to 30% of its market value, is “hard to beat.”
“Our shareholders are going to consider that there’s much more value creation at this bank, which has been top performing for the last four years and still has a long way to go,” said González-Bueno.
González-Bueno reiterated that BBVA’s offer for Sabadell is too low, although he declined to specify what would be appropriate, saying “fair value is always a moving target.”
Given the delay he expects from the CNMC, “the deal will only come to the market, and the tender will be open around the summer next year,” said Sabadell’s CEO.
The passing of time “is something that is not good for for the deal,” according to Gomez-Bravo. Equally, BBVA doesn’t plan to increase its offer.
“We’re very comfortable with the value of the deal,” she said. “There is no need and no intention, really to improve the deal, because it is really a very attractive deal.”
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