Deal Reporter
• No early stage contacts with Sabadell or BBVA, contrary to reports
• Italy viewed as non-core territory for Sabadell, CaixaBank
• Deal-making not on BMPS's 3 July board meeting agenda
Banco Sabadell [BME:SAB] is unlikely to make a move for Banca Monte dei Paschi di Siena (BMPS) [BIT:BMPS] in the weeks ahead, said a source, an adviser and two people familiar with the situation.
Sabadell, which is closing its takeover of TSB [LON:TSB] in the UK, is not looking at BMPS, said a person familiar with the situation. The Spanish bank would not be able to close a second deal so soon after the TSB deal, said the sector advisor. Italy has historically proven a tricky market for Spanish banks, he added.
There have been no early-stage contacts between BMPS and Sabadell, nor its peer BBVA [BME:BBVA], said a second person. Both banks were reported by Il Messaggero on 30 June as having recently expressed some interest in the process.
Sabadell raised EUR 1.6bn in a rights issue to fund the TSB deal. The Spanish lender would not want to raise more funds so soon after its last cash call, the source said, adding that the window for capital raising is likely to close soon, with uncertainty surrounding the future of Greece and Spain’s general election, which will take place before year-end, dogging stock markets.
BMPS has a market capitalization of EUR 4.98bn, which is 44% of Sabadell's market value of EUR 11.25bn.
The report that Sabadell had contacted BMPS emerged as a nine-month deadline for the Italian bank to find strategic solutions to its capital and non-performing loan travails comes to an end. The European Central Bank (ECB) gave BMPS until 26 July to strengthen its capital.
But the ECB has not in fact set a hard deadline for any M&A solution, this news service reported on 2 June. The European regulator cannot force a bank to merge against its will, it was reported.
Il Messaggero’s report flagging possible interest from Sabadell also said that BBVA was interested. Although BBVA looks at all bank auctions as a matter of policy, it is particularly interested in markets where it is already present, said a person familiar with its thinking. The bank only has one office in Italy, the person added.
BBVA is unlikely to be interested in a deal and any such move would come as a surprise, the first adviser said. The bank is not particularly interested in European deals at the moment, the adviser added.
Among other acquisitive Spanish banks, Italy is not a priority market for Banco Santander [BME:SAN], said a person familiar with its thinking. The bank exited Italy in 2008. The market is not seen as strategic by CaixaBank [BME:CABK] either, said a person familiar with the thinking of Sabadell’s Catalan peer.
BMPS will hold an ordinary board meeting on 3 July, the second person said, adding that deal-making is not on the agenda. The Italian bank has not had any contacts with any other potential partners, the person added.
Spokespeople for BMPS, Banco Sabadell, BBVA, Santander and CaixaBank declined to comment.