CNMC sees risks in BBVA’s takeover bid for Sabadell and will conduct an in-depth analysis of it.
The National Markets and Competition Commission (CNMC) sees risks in the takeover offer put forward by BBVA for Sabadell. Organism He chooses to continue his studies in what is called “Phase 2”. and analyze in more detail possible risks to competition in various areas of business of both companies, a stage that involves open the process to third party intervention and bringing charges.
Often Transactions that reach this situation are subject to difficult conditions obtain permission and funds extend the final decision on “Phase II” for at least three months and with it the future decision on the takeover bid. However, the regulator may extend the time of the study or “stop the clock” if the complexity of the question requires it.
The regulator leaves open the possibility of a thorough operational review in Phase II. The CNMC is currently working on the first phase analysis under a confidential procedure. “IN as soon as a decision is made, including the possible opening of the second phase analysis, the decision will be published.” This is reported by CNMC sources.
The deal caused opposing positions within the organization. Some of its experts tend to decide firsta, a prior commitment on the part of BBVA with certain conditions, since They do not see competition problems in any business segment except POS terminals. given the strong position of the Catalan bank. Other members of the organization chose: Instead, by moving the file to more comprehensive analysis due to the hostile nature of the transaction and ensure that no aspect is left unattended despite the government’s outright refusal and concerns expressed by various business associations and regional leaders.
Regardless of the “remedies” that the CNMC could potentially seek, opening a “Phase 2” would delay the resolution of the case in time, with the risk of affecting the operation if it were launched without knowing the verdict of the Competition – this is not the case. mandatory to open the affiliation period, although BBVA considers this a mandatory permit. May the time be very long may also affect the potential success of a takeover bid.
BBVA expected approval in the first stage and on very acceptable terms, confident that the organization use the same methodology used in previous banking integrations. In this regard, he noted that he had given his consent to the merger of CaixaBank and Bankia, which would create the largest bank in the country with a market share greater than that which Sabadell would add to BBVA.
He The Basque Group also ruled out the possibility of providing the required technical criteria. so he analysis expands at a later stage, since the transaction BBVA’s balance sheet does not increase by more than 10%, and the combined company’s share does not exceed 25%. in segments – both criteria that would force us to move to the so-called “second stage” of analysis. “Even if we take a specific segment, CaixaBank has created a larger bank. Taking all this into account, we believe that there are no problems with competition and the bank should move to the first stage,” its CEO Onur Genç said at a recent financial conference.
Anyway, BBVA is expected to undertake certain assignments or obligations, in line with what CaixaBank envisioned when it integrated Bankia or Unicaja with Liberbank. In the merger of CaixaBank and Bankia, the CNMC identified up to 86 postal codes in which the end entity remained alone, in a monopoly or duopoly mode, and set conditions on services and products to avoid deterioration of the consumer offer within three years. years, at the bank’s suggestion. The organization guaranteed that it would not leave the location where only its branches existed, and also maintained an agreement to use ATMs with other organizations for 18 months. To validate the alliance between Liberbank and Unicaja, the new group had to commit to CNMC to also undertake guarantees for products and services in three locations in Cáceres where there was a high concentration.
Sabadell, on the contrary, I bet CNMC will do a more detailed inspection transactions due to the uniqueness of the business. On the one side, the market is much more concentrated that when previous mergers were conceived and any new major move like the one proposed carries the risk of reducing competition in the future, but there is also the peculiarity that BBVA and Sabadell will occupy very strong positions in regions such as Catalonia and Valencia. and in the field of small and medium-sized businesses.
Sabadell President Josep Oliu and its CEO Cesar Gonzalez-Bueno warned that the disappearance of the Catalan bank would pose a serious problem for SMEs as it is one of their major suppliers. According to studies reviewed by the organization, the “overlap” will reach 40% of the 1-2 million SMEs operating in the country, as companies need to work with 3 or 5 banks – BBVA limits the impact to 1.5%, imagine only those working exclusively with both organizations, without considering that they need more financial connections. The Basques were committed to maintaining circulation for twelve pesos, but in the long term the disappearance of the supplier would force them to look for alternatives without the guarantee of finding them on the same terms.
The union of BBVA and Sabadell could lead to duplication, especially in Catalonia. If the takeover wins, between new giant CaixaBank and Santander will share almost 74% of the credit provided to customers. Spain has 64.99% of financial sector assets and 35% of bank branches. In Catalonia and Valencia, three large banks will take over more than 80% of the banking offices, with a third of the total belonging to the group that will emerge from the new merger.
Catalan Competition Agency (ACCO) already assessed in May in a non-binding report that competition in Catalonia will be at risk due to high concentrations. He noted that CaixaBank owns 38.9% of the 2,134 branches located in the region, BBVA – 18.7%, Sabadell – 16.1% and Banco Santander – 12%.
Several business organizations have also asked the CNMC to scrutinize the deal, seeking guarantees against damage to the financing. Pimec, the Catalan SME association, has filled this gap by submitting a report to the competition agency estimating the credit loss (or 8%) that the merger could cause at €54 billion. Later, the Catalan Foment, the Business Confederation of the Valencian Community (CEV), the Confederation of Businessmen of Galicia (CEG) together with the provinces of Lugo, Ourense and A Coruña, the Asturian Federation of Businessmen also warned the CNMC. (FADE) and the Chamber of Commerce and Industry of Valencia.
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