BBVA and Sabadell will create a giant with a market share of up to 30%

Potential alliance BBVA And Sabadell will lead to banking giant in Spain with market share above 20% both in loans and deposits.

With such quota percentages, the resulting organization will be between CaixaBank (25% of loans) and Santander (18%), the two companies with the largest market share. BBVAcurrently controls about 13.4%.

If the integration is completed, the banking group will look like installments above 20% in the corporate loans segment and about 25% in the SME segment, which puts BBVA-Sabadell close to the leader currently occupied by CaixaBank with 25% of the SME market.

Due to the territorial penetration of both companies, the merger will create a company with installments up to 30% in areas such as Cataloniawhere both BBVA (after the purchase of Caixa Catalunya) and Sabadell have their respective market positions.

The resulting group will also have business quotas. above 30% in loans government sector.

This high level of concentration in these markets could lead competition authorities to take action to minimize the impact, Alantra analysts said in a recent report. They don’t foresee problems with authorities responsible for ensuring adequate levels of competition in markets to obtain approval for potential integration.

Suspicion in the company

WITH BBVA announced the submission of a merger proposal to the board of directors Sabadellbusiness associations demonstrated growing concern due to the consequences that such a measure could have on the Spanish manufacturing sector.

In the corporate segment less competition than at a retailer, according to financial sources. The weight of the four big banks (CaixaBank, Santander, BBVA and Sabadell) in this segment is much greater, as is their ability to set prices, they add.

Most companies, including SMEs, have a portfolio of banks from which they are clients and who provide access to finance. “If they take Sabadell from us, we will lose our source of funding

for which there is no replacement today,” business sources explain.

Employers love Catalans Treboll’s promotion wave Chamber of Commerce Valencians have already expressed their disagreement with the possible merger. Chamber President José Vicente Morata deplored not only the hypothetical loss of Alicante as Sabadell’s headquarters (see page 25), but also the concentration risk that the merger entails.

According to Morata, the number of bank operators is declining “drastically” and, in his opinion, “it is not good that 60% or 70% of the financial market remained in the hands of three banks“, he criticized.

More distance

The merger of BBVA and Sabadell will not only strengthen the existence of the three giants in the Spanish banking market, but will also “significantly” increase the difference that the large companies have. with medium banks and small, ratings agency Fitch warned in a recent report in which it assessed the operation.

While BBVA and Sabadell will collectively exceed 20% of the core market share, competitors at a lower level will have weight in the market. from 5% to 2%.

“Banking sector consolidation since the global financial crisis has been more intense in Spain than in other major European markets, and we believe a merger could increase the pricing power of large Spanish banks,” Fitch warned.