ISS, Glass Lewis Recommend BPI Investors Remove Voting Cap

  • Scrapping the limit on voting rights key to CaixaBank bid
  • CaixaBank, BPI’s biggest shareholder, wants to buy out others

Advisory firms Institutional Shareholder Services Inc. and Glass Lewis & Co. recommended Banco BPI SA shareholders remove a cap on voting rights that is preventing CaixaBank SA from acquiring the rest of the bank.

Although the Spanish bank is already BPI’s largest shareholder with 45 percent, its voting rights are limited to 20 percent. It has offered to buy the remaining shares for about 900 million euros ($997 million) if BPI scraps the policy. The issue comes up for a vote at a BPI shareholder meeting on July 22.

CaixaBank has been trying for more than a year to buy out other BPI shareholders. Earlier this year, the bank failed to reach an agreement with Isabel dos Santos concerning BPI’s assets in Angola. Dos Santos is BPI’s second-biggest shareholder with an 18.6 percent stake.

ISS and Glass Lewis have advised investors to back the proposal to end voting limits, according to reports seen by Bloomberg News. The advisory companies didn’t immediately respond to phone calls or emails Friday seeking comment.

“The proposed bid can be a reasonable option for certain shareholders even though it would entail lower liquidity,” ISS said in its report. Without it, “BPI may be unlikely to sort out its concentration of risk in Angola and make its domestic activities profitable again.”

Holding Violas Ferreira, with a 2.68 percent stake, has objected to removing the cap to meet CaixaBank’s terms, saying the bid doesn’t reflect the value of BPI. The firm has proposed instead that BPI merge its activities in Angola with another lender in the African country.

Glass Lewis, without taking a position on CaixaBank’s bid, said that in general “removing barriers to open takeover bids, whether current or future, serves shareholders’ interests.”

Banco BPI’s board argues the cap may deter shareholders from taking part in major corporate decisions, such as financing or mergers or acquisitions.

ISS said dos Santos has used her voting rights in the past to “thwart board proposals leading the company and its shareholders to a deadlock that does not benefit minorities or the company.” At the last shareholder meeting, dos Santos opposed a rule change, preventing Chief Executive Officer Fernando Ulrich from being reappointed in 2017.

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