BBVA has pledged key measures, together with department retention and SME credit score ensures, to ease antitrust considerations over its merger with Sabadell. Whereas regulators cite dangers to competitors and rural entry, the deal may reshape Spain’s banking sector if authorised.
BBVA has submitted a collection of commitments to Spain’s Nationwide Markets and Competitors Fee (CNMC) to deal with antitrust considerations relating to its proposed merger with Banco Sabadell.
The measures intention to safeguard monetary inclusion, maintain lending to small and medium-sized enterprises (SMEs), and guarantee competitiveness, significantly in Catalonia and the Valencian Group, the place each banks have a robust presence.
Key features of the proposal embrace BBVA’s pledge to not shut branches in areas the place competitors is proscribed, in addition to a assure to keep up industrial phrases for people and SMEs in postal codes served by fewer than 4 monetary establishments.
The financial institution has dedicated to upholding all working capital strains for SMEs for 18 months following the merger and preserving the entire quantity of credit score for SMEs completely banking with BBVA and Sabadell for a similar interval.
Moreover, BBVA has proposed sustaining pricing requirements for SMEs on the nationwide common and guaranteeing transparency in modifications to industrial insurance policies for Sabadell clients.
“These commitments largely mitigate the dangers recognized by the CNMC, that are principally targeted on sure territories,” BBVA commented in a press launch.
In September, BBVA secured approval for the merger from the European Central Financial institution, however Spain’s unbiased competitors regulator demanded further assurances to forestall a deterioration in market competitors.
Carlos Torres Vila, BBVA’s Chair, described the ECB’s earlier endorsement as a “vital milestone” that underscores the plan’s soundness and solvency. He additionally highlighted that there are “no competitors points within the transaction with Banco Sabadell.”
BBVA-Sabadell merger: Regulatory hurdles highlighted
In its detailed report launched Wednesday, the CNMC raised a number of considerations stemming from the transaction.
Whereas the merger wouldn’t create municipal monopolies, the mixed entity would dominate in 50 municipalities, leading to duopolies that might restrict client alternative.
Significantly troubling for regulators is the chance of diminished credit score availability for SMEs as a result of differing diversification ranges of the 2 banks.
BBVA’s stronger diversification in comparison with Sabadell may result in a consolidation of lending practices, doubtlessly harming smaller companies.
The CNMC additionally famous the chance of department closures, particularly in underserved rural areas. The report emphasised the reliance of sure demographics, akin to older and financially susceptible people, on bodily banking providers.
The potential closure of branches in these areas may pressure residents to journey lengthy distances for in-person banking, exacerbating monetary exclusion.
As well as, the CNMC expressed considerations about the potential for BBVA robotically transitioning Sabadell’s clients to its personal merchandise, doubtlessly at much less beneficial phrases. The dearth of transparency throughout such transitions may worsen situations for patrons, significantly if they’re unaware of higher alternate options inside BBVA’s portfolio.
Additional scrutiny was directed at the marketplace for buying providers and managing point-of-sale terminals (TPVs). The merged entity would change into the nationwide chief on this market, with a market share exceeding 30%. The CNMC warned this might end in increased charges for companies reliant on these providers, akin to elevated commissions or month-to-month tariffs.
Subsequent steps and potential impacts of the merger
The CNMC has invited suggestions from stakeholders, together with client teams, SMEs, and competing monetary establishments, throughout the subsequent ten days. This enter will kind a part of the second-phase investigation, which is predicted to increase into 2025.
If authorised, the merger would create certainly one of Spain’s largest monetary establishments, consolidating vital market energy in key areas.
“The mix between BBVA and Banco Sabadell, as soon as authorised, will create a stronger, extra environment friendly establishment that’s higher in a position to compete within the European and world panorama,” BBVA acknowledged in a report final month.
In Spain, it might rank because the second-largest banking group by market share in loans, holding complete belongings of €265 billion.
In accordance with BBVA, the mixing is predicted to ship a extra diversified buyer providing by capitalising on the complementary strengths of each banks: BBVA’s give attention to retail and enormous company purchasers, and Sabadell’s sturdy presence amongst SMEs.
Market reactions
Shares of BBVA fell 0.7% throughout noon buying and selling on Thursday, marking a 3rd consecutive session of losses. The decline was pushed primarily by deteriorating threat sentiment amid escalating geopolitical tensions between Russia and Ukraine, mirroring the downward pattern noticed in Spain’s IBEX 35 index.
Banco Sabadell shares equally slipped 0.7% throughout the session.