BPCE acquired a stake of about 7% in Spain’s Banco Sabadell SA as Chief Executive Officer Nicolas Namias seeks to expand business outside the French home market.
The investment is of a “friendly nature” and the goal is to “explore strategic cooperation to make BPCE’s capabilities available to Sabadell’s clients,” the two firms said in a joint statement Tuesday. A 7% holding in Sabadell was valued at about €1.19 billion ($1.3 billion) at Monday’s close.
The French banking group will have board representation at Sabadell and pledged to keep the stake below 10%. The investment makes the French lender the second-largest shareholder in the Spanish bank, after US investment firm BlackRock Inc., according to data from the Spanish stock market regulator.
It’s the next step by Namias to expand abroad since he assumed the helm almost four years ago. He completed the €6.7 billion acquisition of Portuguese bank Novo Banco earlier this year. An effort to merge BPCE’s asset manager Natixis Investment Managers with Generali’s fund operations foundered last year on opposition from the Italian government.
The Sabadell investment furthers BPCE’s “ambition to develop and diversify its presence in Europe,” Namias said in the statement.
Sabadell rose 3.1% at 9:10 a.m. in Madrid, bringing gains this year to 8.9%.
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BPCE’s “decision to invest in our company is a recognition of the strength of our standalone project,” Sabadell Chairman Josep Oliu said in the statement. “Their presence reinforces the strength and stability of our shareholder base.”
For the Spanish lender, the BPCE investment adds another large shareholder interested in its distribution capabilities. It also counts Zurich Insurance Group AG among its investors. The support from the Swiss insurer for the lender’s independence proved important in Sabadell’s successful defense last year against a hostile takeover bid from domestic rival BBVA SA.
“Banco Sabadell has found a white knight that could defend it against another unsolicited bid,” Alantra analyst Francisco Riquel wrote in a note. “We are not clear, though, on BPCE’s long-term intentions for Sabadell, or whether it could over time push to create an SME champion in Iberia with Novo Banco.”
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BPCE and Sabadell will “explore business cooperation opportunities, in particular in corporate and investment banking, equipment leasing, consumer credit, and cross-border clients business,” they said in the statement. These discussions are expected to be concluded early next year.
Namias has been looking to diversify further beyond France as the country contends with political instability and large fiscal deficits. The French 10-year yield has surged in recent months, while the premium investors charge to hold those bonds over equivalent German bunds recently hit the highest level since the euro area debt crisis.
“By investing in Sabadell, we are investing in a healthy Spanish economy,” Namias said on a call with reporters.
European banking consolidation is constrained by regulatory fragmentation and political resistance, although strong capital buffers are helping banks pursue deals. The acquisition of Novo Banco was one of the largest cross-border banking deals in the eurozone in the past decade, and the most significant move abroad for BPCE since the group’s creation in 2009.