TALKS HAVE broken down between two of Portugal’s largest private banks over a merger deal which would have created an Iberian super bank worth 16 billion Euros with assets of 133 billion Euros.
Merger negotiations between Millennium bcp and the Banco Portugues de Investimento (BPI), which had begun nearly three weeks ago, were expected to culminate in agreement on Monday, 26 November, but broke down over the weekend.
Both banks failed to reach a consensus over the value of a two-to-one share exchange in favour of Millennium bcp.
BPI had accepted handing over the executive leadership (CEO) of the new bank, Millennium BPI, to Millennium bcp current CEO Filipe Pinhal, keeping BPI’s Fernando Ulrich as the new entities Vice President with BPI’s Artur Santos Silva as Chairman or Non-Executive President, but stayed firm to its initial economic line, which defended the exchange of one BPI share for two Millennium bcp shares. Millennium bcp disagrees saying that as the larger, more valuable bank, it should have a better deal.
Millennium bcp shareholders have been fighting for the more favourable share exchange ratio of 1.8 BCP shares for each BPI share.
Meetings
Monday last week saw a number of meetings with key shareholders from banks including La Caixa, which would hold 7.6 per cent of the new bank, Eureko, 9.96 per cent, Itaú, 5.3 per cent, Joe Berardo, 5.5 per cent and Grupo Teixeira Duarte, 5.5 per cent, among others aiming to hammer out an agreement on the merger.
A further meeting between Eureko and BCP representatives Jardim Pinhal, Beck and António Rodrigues was the last in a series of meetings with leading BCP shareholders at Portugal’s largest private bank.
Millennium BCP had been expected to announce a breakthrough at a Board of Director’s meeting on Monday but agreement was still dependant on consensus between the bank’s General Board of Directors and its Supervisory Board, presided over by its founder and Chairman Jardim Gonçalves.
However, late on Sunday night following armchair negotiations between the top shareholders both entities issued a short joint statement that talks had broken down without success.
Ulrich’s position as a manager was a condition set by Spanish bank La Caixa which holds a 25 per cent share in BPI.
Under the terms of the proposed merger Jardim Gonçalves was to have withdrawn from the active running of the new bank providing that BCP got to select the new bank’s Chairman.
However, unlike BPI’s shareholders and top management which has been reasonably united from the start, Millennium bcp investors and management hold different positions, have different agendas and objectives and have displayed disunity and frequent changes of opinion over the past few weeks.
Sensitive issue
Millennium bcp was also insisting, as the larger bank, to be the ‘incorporating entity’ rather than the other way around, a point which has been a sensitive issue and potential sticking point from the very beginning.
“BCP is the largest private bank in Portugal and for its directors and shareholders it’s unthinkable that it should be swallowed up by BPI,” said a source.
Ultimately the share exchange ratio that BPI had been proposing of one BPI share for each two BCP was the main bone of contention.
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