BarcelonaDonald Trump‘s victory in the US elections will have an effect on BBVA‘s takeover of Banco Sabadell. It is the financial version of the butterfly effect and in this case it clearly favors Sabadell’s interests in its struggle to remain an independent entity. Why? Straight and short: because BBVA has 44% of its business in Mexico and Trump is threatening this country with tariffs of up to 75% on all its products. The impact of this measure would be enormous, considering that in 2022 the United States was the first recipient of Mexican exports with 78% of the total. If companies sell less, they will invest less, hire less and the economy of businesses and individuals will be worse, which will be felt in the banks that operate in the country.
In fact, on the same day that Trump’s victory was announced, the stock market gave a first indication of this situation: BBVA led the decline of the Ibex-35, with a drop of 6.6%. No one fell that far. But this data must be read with caution: all banking suffered because of the Republicans’ victory and Banco Sabadell itself lost 6.1% of its capitalization. The explanation must be found in the fact that the European Union also faces the threat of an increase in tariffs that will complicate its trade with the world’s leading economy. And how would Europe do to be able to continue selling there? “For the European Union to be more competitive, the euro will have to be cheaper, and this is achieved by lowering rates,” explains Xavier Brun, professor of finance at the UPF-BSM and head of securities at fund manager Trea AM. And rate cuts directly affect bank profits, which see the commodity they trade in (money) become cheaper.
Since the start of the bank raid, BBVA has lost 15% of its value and Sabadell has risen by 4%
This Thursday both banks improved their share prices (BBVA grew by 3.4% at midday and Sabadell rose by 3.5%) in a move that confirms, once again, that stock market developments have not favored BBVA in the last months The day before BBVA’s interest in the Catalan bank became known, the former’s share was at 10.90 euros and that of the latter at 1.74 euros. Half a year later, BBVA has lost 15% on the stock market while Sabadell has gained 4%. Experts point out that the quotation of both banks will be key when it comes to seeing to what extent they can convince funds and individuals of the desirability of the offer presented by the bank chaired by Carlos Torres.
The time factor benefits Oliu
There is a second factor that, against all odds, has improved the Catalan bank’s prospects in this operation. The prospect of a worsening of the Mexican economy, BBVA’s mainstay, introduces a certain haste in the operation. “Now BBVA needs the takeover to be accelerated because it knows that its business will be worse and it has a greater need to diversify,” explains Brun. This expert even believes that BBVA may be forced to improve the offer: “They want to do the operation by changing trading cards [amb relació a l’intercanvi d’accions plantejat] and now their cards will be worth less,” he explains.
BBVA is in more of a hurry just as rumors are growing that Competencia will ask for more time to study the operation
That BBVA is in a hurry right now is particularly negative. Different financial sources consulted by the ARA assume that next week or so the Competence will give its first verdict on the operation. And this verdict will go, precisely, along the lines of sending the analysis on the opa to phase 2, that is to say, that they see problems and ask for more time. This situation is what Banco Sabadell has demanded since the beginning of the tender (together with all the Catalan employers), because the disappearance of a bank would hit competition, especially in the field of companies.
