May 22, 2024 13:55 GMT
Bank Consolidation: Lots Of Noise But Little Action, SABSM Trading Tight
FINANCIALS
Bank consolidation - lots of news in the wake of BBVA going hostile for Sabadell so worth noting that there’s lots of noise around European bank M&A but little real action. Sabadell’s equity price is still 8% below the value of BBVA’s bid, so still some market scepticism there. SABSM spreads are 24bp tighter on the month (€IG banks: -18bp) and trade tighter than (better-rated) BKTSM (see senior non-preferred graphic).
- FT is carrying a story indicating Unicredit CEO Orcel welcoming French President Macron’s recent expression of support for consolidation. Macron reportedly sees dealmaking as important to creating a capital markets union and Orcel specifically wants larger banks tocompete with “US and Asian rivals”. Unicredit did nearly buy BMPS to aborted the deal late in the process and is also linked with, amongst others, Commerzbank and Banco BPM (also trading tighter than might be imagined).
- BBVA – Sabadell currently looks like an example of the opposite attitude. Spanish Economy Trade and Enterprise Minister, Carlos Cuerpo, is reported as saying BBVA can own Sabadell but not merge with it (source: Onda Cera radio). He cites reduced competition as his reasoning.
- BBG is also reporting the BBVA has hired lobbyists in an attempt to overcome such political hurdles.
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