Onur Genç: “Banco Sabadell shareholders would obtain 27 percent higher earnings per share from the BBVA integration”
BBVA CEO Onur Genç discussed the transaction with Banco Sabadell during the earnings presentation for the first half of the year. Genç stressed that this combination creates value for both Sabadell and BBVA shareholders. “We both win in this transaction: we create value and we share it,” he said. Specifically, thanks to the substantial synergies created, Banco Sabadell shareholders would obtain 27 percent higher earnings per share (EPS) in the combined bank than if the bank continued as a separate entity¹, according to calculations based on analyst consensus for both banks.
This higher earnings per share would, in turn, translate into sustainable dividends over time, as BBVA is maintaining its attractive shareholder distribution policy, with payouts between 40 to 50 percent of profit per year. And it is committed to distributing any excess capital over 12 percent². “This is an extraordinarily attractive offer for Banco Sabadell shareholders,” the BBVA CEO reiterated.
This would be in addition to the attractive premium offered by BBVA: 30 percent higher than closing prices from April 29th; 42 percent higher than the volume-weighted average prices from the month before April 29th; and 50 percent of the weighted average prices from the previous three months³.
Onur Genç underscored that “the process is moving forward in a positive direction and according to schedule” and he made a special mention of the “massive support from BBVA shareholders for the capital increase needed for the share exchange” at the Extraordinary Shareholders’ Meeting on July 5th.
The BBVA CEO recalled that “the integration of both banks will create a stronger, more profitable franchise, with the capacity to lend an additional €5 billion per year to families and businesses in Spain.”
Furthermore, he emphasized that the transaction is a clear example of our focus on gaining scale in our main markets, especially in the SMEs segment in Spain. “This transaction represents a clear commitment to SMEs in Spain and we are going to grow there. It is not a cost transaction. It’s a growth transaction,” he stated.
Onur Genç explained that the transaction would produce “very significant synergies” because of the rising need for investment in technology and the high fixed costs currently facing banks. He specifically pointed out that technology costs make up 26 percent of total costs for the Group. Therefore, due to such significant synergies “we presented an extraordinarily attractive offer to Banco Sabadell shareholders while preserving value creation for our BBVA shareholders,” he said.
He then offered new information on the estimated financial impact of the transaction. On the one hand, the breakdown of the expected synergies, €850 million in total, of which €450 million correspond to savings in administrative and technology; €300 million to savings in personnel costs; and the remaining €100 million to savings in funding costs. He also added that the rationalization of branches in Spain would be limited to less than 10 percent of the sum of both banks’ branch networks - specifically around 300 branches (of the 870 from the combined Group that are located in a radius of less than 500 meters from one another).
During his presentation, Onur Genç put the spotlight on BBVA’s strong performance in terms of profit, profitability and efficiency. Regarding profit, he stressed: “Not only did we reach nearly €5 billion of net attributable profit in the first six months of 2024, we did so by consistently increasing our half-year profit by nearly €1 billion more per year” in recent years. Along these lines, he underscored that out of the 15 biggest banks in Europe, “we are number one in Europe in terms of growth and profitability.”