CNMC sees risks for SMEs in BBVA-Sabadell takeover bid

National Commission for Markets and Competition (CNMC) put the BBVA-Sabadell takeover bid in the spotlight(BBVA.ES) and (SAB.ES), expressing serious concerns about its impact on the Spanish financial market. The institution decided to subject the operation to an exhaustive review (Phase II) due to the possible risks of access to credit for companies and retail consumers.

CNMC believes that the BBVA-Sabadell takeover proposal could harm small and medium-sized businesses.

CNMC found that A merger between these two large banks could result in a duopoly in many municipalities.limiting SMEs’ options and reducing their ability to negotiate. This situation is particularly worrying in Catalonia and Valencia, where banking concentration is already very high.

The BBVA-Sabadell takeover bid is at the center of intense debate about its impact on the Spanish financial market. Various organizations have warned of the potential negative impact on SMEs, particularly in terms of access to credit. In this context, CNMC found inconsistencies in the economic studies presented by both banks regarding the impact on SMEs.. Despite the commitments BBVA has proposed to mitigate these impacts, such as maintaining liquidity and preventing branch closures, the regulator believes that the risk of deterioration in credit conditions for SMEs remains.

Another major issue for CNMC with this merger relates to card payments. Takeover bid for BBVA-Sabadell will create a giant in the POS sector with a market share of over 30%. Such excessive concentration may lead to a scenario where the new entity has disproportionate market power, which in turn may lead to anti-competitive practices.

Specifically, There are concerns that this new dominant enterprise will create a less favorable business environment.for example, increasing transaction fees or reducing services offered. This can lead to increased costs for businesses and ultimately consumers.

Possible ATM losses

In addition, CNMC expressed concern about the possible loss of cooperation agreements between Sabadell and other ATM networks such as Euro 6000, which could limit customer options. Although BBVA has committed to maintaining access to its ATMs for customers in Sabadell and other networks during the transition period, The agency believes that this situation could create uncertainty and harm users in the long term.. The loss of Sabadell’s ATM network to non-Customer customers could significantly limit their ability to withdraw cash and perform other banking transactions.

In short, CNMC expressed doubts about the takeover proposal for BBVA-Sabadell due to possible negative consequences for competition. and in terms of lending for SMEs. Therefore, the institution carefully analyzes this operation to assess whether it is compatible with competition rules and how many corrective measures should be taken to ensure effective competition in this sector.

So far tomorrow the price movements for BBVA and Sabadell shares are very uniform. with a nine-tenths drop for both. Specifically, BBVA shares are trading at €9.15 per share, while Sabadell shares are trading at €1.81. However, for the year, BBVA shares are up more than 8%, while Sabadell shares are up more than 58%.