In Full: BBVA Chair Torres on Sabadell Bid, Continuity

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00:00Let's kick it off by talking about this deal and do a little bit of a porsmortem here.

00:05From your perspective, where did this deal go wrong? Did you miscalculate?

00:10Thank you, Krivi. It's a pleasure to be back in your show with you.

00:17We will have plenty of time to analyze, and we can speculate at this stage about what might

00:22have happened. Clearly, the result is not what we expected. It's not the result we wanted,

00:27but it's the result that the majority of the shareholders of Sabadell have decided.

00:31So we accept it fully, and we move on and continue to look forward to a bright future.

00:38Maybe one thing that might have influenced behavior of the retail shareholder might have

00:43been the expectation of a second offer in cash, which was, as I told you last time I was with you,

00:50uncertain. And I think what has happened demonstrates that it was indeed uncertain.

00:55Also, maybe the passive funds might have not tendered as we had expected. But as I was saying,

01:03this is all at this stage, just hypotheses, and it doesn't really matter much. What matters is the

01:09result, the decision by the shareholders of Sabadell. They are the ultimate decision makers. We accept

01:14it fully. We move on, and we continue to look ahead.

01:18Carlos, in the last time we spoke, to your point, you also were quite clear that if you couldn't win over

01:23the retail shareholder base, at least a shrewd institutional investor base would perhaps see

01:29the value of this takeover bid. Now, Sabadell's story is interesting. The retail shareholder base

01:34has a long history with Sabadell, but what about the institutional shareholders, some of which you

01:39did convert, like the likes of David Martinez, among others? But is there an indication here of what

01:44they were reacting to? Well, as I was saying, it's all at this stage, hypotheses that we can make about

01:51what might have happened. It doesn't really change the results. So I don't think we should ponder much

01:57about the reasons why they did or did not tender. I do believe the institutionals did tender in a large

02:04majority, the long-onlys in particular, also the hedge funds and the arbitrageurs. But they weren't of the size

02:11that they had been in other deals, for the reasons that this took a long time. And maybe the behavior of retail

02:18and also the narratives in the press and in the media around what might have happened with the second offer

02:23might have influenced also the passives in terms of their expectation of what might happen. And that might have

02:33led to a lower tendering.

02:36Carlos, let's talk about the path forward then for BBVA. One of the key drivers when it

02:41comes to BBVA looking at the domestic market in Spain was to perhaps limit or even offset some of

02:46the pressure the bank was facing when it comes to their emerging market exposure. Now that Sabadell

02:51is off the table, how do you plan on addressing that concern from your shareholders as well as the

02:56Spanish government? Yeah, we have been working over the last few years on many fronts, delivering

03:05record results. We have grown our net observable profit over the past years at a 30% growth rate,

03:12annual growth rate over the past three years. And including this year, where we continue to grow

03:18at a good rate, presenting record results. We have gained market share in all markets, including in

03:25Spain. In Spain in particular, we are growing our market share across the different segments. We're

03:30growing our loan book as fast as it has grown in a long, long time. It has grown at 6% annual rate

03:37in the last 12 months. And what we have been doing is working on our strategic plan. We approved the

03:44strategic plan at the beginning of this year. We have presented very ambitious goals for the next

03:49five years, the next four years, 25 to 28. And those, we are already today, the bank with the best

03:58growth profile in Europe, with the best profitability in Europe. And the ambitious goals we presented,

04:06the 22% return on tangible equity, 15% increase, annual increase in tangible book value, and really

04:14the net attributable profit of $48 billion. Those maintain BBVA at the lead of the European banking

04:23sector in both growth and profitability. One important aspect of our plan going forward is

04:30shareholder distributions. So now the lapsing of this takeover bid over Sabadell takes away all

04:40restrictions we had on distributions. And our shareholders will see the immediate benefit with

04:46an acceleration, an immediate acceleration of shareholder return of capital to shareholders

04:52through several means. So on October 31st, the day after we present our third quarter results,

04:59we will immediately start the 1 billion euro share buyback that we're spending. November 7th,

05:05we have the dividend payout for the interim dividend. So that two elements amount to 2.8 billion euro.

05:14And then we have decided to put ahead another share buyback program, a sizable new share buyback

05:27program, which will happen as soon as we receive the approvals from the ECB.

05:32Yeah. And Carlos, the announcement from yesterday that you just outlined, of course,

05:37already being well-received by the ADRs, BVA ADRs, I should mention to our global audience,

05:42surging in the U.S. session to the tune of about 7%. So likely something we're likely to see mirrored

05:46in the European session today. Carlos, that does give the indication, though, that if a lot of these

05:51funds are focused now on buybacks and shareholder returns, there are two questions that investors want

05:56to know. One, is M&A still on the table, not only for BVA, but for banks across Europe? And second,

06:04what does that mean for your future as the BBVA chairman?

06:09We, after this episode, we close this chapter and we move on and we continue to look ahead,

06:18completely focused on executing our strategic plan. It's a plan which is a growth plan entirely based on

06:24organic growth and on returning to our shareholders the excess capital above our capital target of 12%.

06:31So the actions I just outlined in terms of the immediate share buyback, the dividend, and the new

06:36sizable share buyback program are testament to that strategy. And we will squarely be focused on that,

06:43not on M&A. And regarding my continuity, yes, I have been saying throughout this process that

06:49irrespective of what happens, I will be heading the bank as long as shareholders and the board

06:56want me to be doing so. I think what matters is the results and the performance of the bank. And if

07:02we look back, it has been an outstanding return to shareholders ever since I became chairman at the

07:08end of 2018. Our shareholders have multiplied their value by five, which is well ahead of our European

07:15peers, which is a 3.3 multiple or the other Spanish banks, which is also around three times.

07:23Well, Carlos, I hear you. A final question then, just to clarify what I'm hearing. You do intend to

07:27stay on then as chairman of BBVA. No resignation in sight, no pressure from the board as it stands?

07:35No, not at all. The board is fully backing the entire management team unanimously. The board has been

07:42the one making all decisions throughout this process from the very first decision in a unanimous

07:48way also. And as I just said, yes, I will continue. There's no doubt about that.

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