Banc Sabadell's last talks to absorb Banco Guipuzcoano

The first Catalan private bank is coming to an agreement to merge with Banco Guipuzcoano, from the Basque Country. Banc Sabadell would absorb the Basque bank through an exchange of actions. If the merging comes to an end, it will be the first merging of 2


June 11, 2010 11:47 PM

Sabadell (CNA).- The two banks have confirmed the talks to merge. Banc Sabadell, which is 8 times larger than Banco Guipuzcoano, would absorb the smaller bank through an exchange of actions. To be confirmed, this merger would be the first one involving two private banks in Spain during the current crisis, since mergers of savings banks have already taken place. Banc Sabadell is the first Catalan private bank and the fourth private bank in Spain, with 82 billion euros of total assets. Banco Guipuzcoano 10 billion euros of total assets and is already known by Sabadell, as the Catalan firm owned 10% of Guipuzcoano until 2000.

The financial and later general economic crisis is changing the Spanish landscape regarding financial institutions. From an initial reluctance to the current situation where several mergers have been announced or confirmed, only some months have passed. The Bank of Spain and the Central Government have pushed for mergers to happen. Some autonomous governments such as the Catalan one have also done so. The savings banks have been the first ones to move and merge, especially after the Bank of Spain allocated a fund to help such operations. Now, Banc Sabadell and Banco Guipuzcoano confirmed this morning that they were in advance talks to merge, although a final decision has not yet been taken. This operation would be the first one in Spain affecting private banks in the current crisis. The new group would be the 4th private bank group in Spain.

Banc Sabadell is already the 4th private bank in Spain and the first private bank in Catalonia, whose financial landscape is dominated by savings banks, in particular by La Caixa, the largest savings bank in Europe. Catalan savings banks were the first ones in Spain to start merging. Now seems to be the turn of private banks; in particular the medium-sized segment, as the two giant Spanish banks Santander and BBVA play in another league. Banc Sabadell made its last purchase of another bank four years ago, when it absorbed Banco Urquijo, but in the first years of the crisis it remained quiet. Banc Sabadell, which has about 1,200 branches but very few ones in the Basque Country, would absorb Banco Guipuzcoano, which is originally from this autonomous community. Banco Guipuzcoano has around 250 branches, most of them in the Basque Country. In terms of profit, both banks are having positive profits. In the last term, Banc Sabadell had some 108 million euros of profit and Banco Guipuzcoano around 11 million euros.

The next steps are the approval of the merger by both administration councils and proceed with the operation, since they have already talked to the Spanish regulatory authority of the stock exchange market (Comisión Nacional del Mercado de Valores). The Bank of Spain sees with positive eyes this merger and very likely it would not put any objection. The new group would be comparable to the 3rd private bank in Spain, Banco Popular, even though it is still almost 40% larger.