BCP has been protected from hostile takeover attempts by 30% vote protection and strong capital

The reduction in the stake of the largest shareholder in Banque Centrale Populaire to 20.03% has been analyzed by several analysts, at the request of Jornal Economico. On the part of stockbrokers, the analysis focused on the reasons for the decline in the bank’s shares by 6.75%, led by Miguel Maya. Which closed Tuesday's session at 0.2681 euros. During the session, they fell by 8%.

More sectoral analysts are evaluating the possibility of the Banque Centrale Populaire being more “choosy”, after the largest shareholders moved from 50% to 40%. Fosun now has a stake equal to that of Sonangol (which owns 19.49%), bringing the core group of shareholders in Portugal's largest private bank down from about 50% to about 40%.

It is possible to view the reduction of Chinese company Fosun's stake in the Chinese central bank from 30% to 20% as an open door to public takeover bids, which may gain more steam at a time when the European Central Bank appears to be encouraging bank concentration. But the People's Communist Party has a legal voting threshold of 30%. The articles of association stipulate that “votes cast by a shareholder, directly or through a representative, which exceed 30% of the votes corresponding to the share capital shall not be counted.”

The voting shield cannot be dropped easily, as the Articles of Association also provide that deliberations on a change to the Articles of Association must be approved by a two-thirds (66%) majority of the votes cast, whether the Assembly meets on the first or second call and regardless of the number of shareholders present or Actor in any of them.

The approval of three-quarters (75%) of the votes cast must also be obtained for deliberations relating to the merger, division or transformation of the Banque Centrale Populaire.

Therefore, it would be difficult to make a bid for BCP. On the other hand, the bank currently has strong capitalization and ratings that allow access to liquidity, removing the pressure of speculation that the bank is a pawn in the M&A process.

This is exactly what market analyst Marco Silva, from CIS Assessment, says. “It should be noted that this move by Fosun in no way means a less positive scenario for BCP, the company is now much better off than it was a decade ago and this has been demonstrated by the demand in the accelerated block sale exceeding 5% of BCP, it was performed on Monday,” he explained to JE.

Marco Silva also pointed out that it is already a known fact, since 2023, that Fosun needs to relax its leverage ratios. “It was clear that once the company entered the national market, it would happen as soon as interest rates rose,” the analyst said, so “it was not surprising that the company’s participation in the Banque Centrale Populaire was reduced, which is not the first time,” the analyst said. Last year it also divested similar investments, however, according to the company, it maintained at least 20%, and the validity of this will only be verified depending on developments in Fosun's financial behavior in the coming months.

Felipe Garcia, from the International Monetary Fund – Financial Market Information, preferred to highlight, also in statements to JE, that “the interesting developments on the market show that the two main shareholders of the Banque Centrale Populaire are not very committed to continuing to be the most important players in the future of the bank.”

Among these developments, said the analyst, are “the fact that Fosun sold a third of its stake – while not rejecting the intention to sell more in the future – and Sonangol’s recent statements that it wants to remain a shareholder in Banque Centrale Populaire, but available for mergers.” “For this reason, my conclusion is that control of the Banque Centrale Populaire in the long term remains an issue on the table, and at this moment with more Free buoyancy In the market,” he said.

Regarding the European Central Bank’s position on this issue, Felipe Garcia noted that “the European supervisor indicated that he would prefer not to have non-European entities own capital from European Union banks.” “Both through comments and through legislation in progress, the idea that they are positive about bank consolidations is becoming clearer,” he added. In other words: “The question of the long-term shareholder structure of the Banque Centrale Populaire can only be viewed in light of this situation.”

Regarding the market value of the shares, yes, the impact of the sale of BPC shares by Fosun may cause damage. “It is important to highlight that the securities have already been in a period of consolidation in the last three months, remaining within a trading range between €0.27 and €0.31,” highlights XTB analyst, Vitor Madeira, who emphasizes that the selling put “additional pressure on Security, which brings the price back to its lowest levels recorded in October 2023.”

The PSI was the most punished European index this Tuesday, due to a decline in shares of the Banque Centrale Populaire, after Fosun announced the acceleration of the deposit of the bank's securities, reducing its participation to about 20%. This is after Fosun sold 860 million shares of Banque Centrale Populaire outside the stock exchange at a price of 0.278 euros, which represents a discount of 3.3% compared to the closing price of the previous day.

Shares of the Miguel Maia-led bank closed on Tuesday at €0.2681, below the value of Fosun's sales, and representing a 6.75% decline compared to the previous day's close.

Regarding the decline in BCP shares, Vitor Madeira, an analyst at XTB, told Jornal Económico that the strategic decision taken by Fosun to carry out a “fire sale” to private investors had a significant impact on the share price, resulting in a decline of more than 7 points. % on the price of securities sold at a “discount”.

“At this point, the price is very close to important technical support, and if a downside breakout occurs, it could send BCP shares down even further,” warns Vitor Madeira.

On the other hand, he says: “The inability of the price to break new highs indicates that there may be underlying structural reasons.” But he adds: “It is important to note that it is too early to confirm this scenario.”

“It is worth noting that, even given the current context, Fosun remains one of the major shareholders, along with Sonangol,” says the XTB analyst.

He added: “This decision may have been an attempt to take advantage of the opportunity to achieve capital gains, at a time when the bank recorded a significant increase of more than 130% during the year 2023.”

“Moreover, the bank's macroeconomic prospects may not be very favorable, creating an opportunity for profits,” analyzes Vitor Madeira.

In turn, Mario Martinez, an analyst at ActivTrades, says that the sale of BCP shares by the Chinese shareholder is no longer the first in the divestment cycle, referring to the fact that Fosun, the majority shareholder, has now gone ahead with the sale. By 5.6% of the Banque Centrale Populaire, but previously, in the second half of last year, it had already sold 4.31% of the capital. “However, Fosun currently intends to maintain a position of more than 20% in National Bank, and it is not clear whether it will need to further reduce its investments or not. It will depend on how the company’s financial situation develops in the future.” months,” says the analyst from ActivTrades.

When asked about the reason for this decline, Mario Martins said: “It was expected that Fosun would need to reduce its portfolio positions, taking into account the enormous financial leverage it has and the more difficult period the market is going through in China.” “In addition to the much higher current financial costs of debt servicing, as a result of rising interest rates globally.”

“The sale of an important block of shares in any company, by a reference shareholder, always represents, in the short term, a negative incentive for the securities of that company, but there is no alarm signal at the moment, especially since the Banque Centrale Populaire “is today in a better financial position.” Much more than it was a decade ago, it is a profitable and interesting operation for the capital market, and that is why the sale that Fosun has now carried out has been successful, despite the speed with which it was executed,” defends the Active Trades analyst.

How far could it go this fall? For broker ActivTrades, the decline in BCP shares “should be limited, and the most important thing in the medium to long term is the quality of the bank’s business and not a partial reduction of the investor’s position.”

It should be noted that the investment house, cited by Jornal de Negocios, Bestenfar, issued a note revealing that it is less optimistic about the performance of Banque Centrale Populaire shares over the next 12 months. The Spanish bank cut its price target for BCP from 0.42 to 0.40 euros, according to a research note reported by Bloomberg, and the downward revision comes a day after BCP announced that Fosun, the majority shareholder, went ahead with the sale of 5.6% of its shares. capital.

Julien Grandjean, director of the financial institutions group at Fitch Ratings, who was interviewed by Jornal Económico after the operation was announced, said he did not see the reduction in Fosun's strategic stake as weakening the shareholder structure of Banque Centrale Populaire. “First, because Fosun is selling only 5.6% and will remain a reference shareholder, so I do not think this sale indicates a decline in Fosun's confidence in the Banque Centrale Populaire's business model,” he said.

“Secondly, in our opinion, Fosun's stake has always been neutral with respect to the credit profile of the Banque Centrale Populaire. Even if we consider that Fosun supported the bank's management in implementing the strategy, we have never included any support from Fosun in our ratings,” the Fitch official added.