BBVA presents a number of commitments to the CNMV regarding the approval of the merger with Sabadell.

BBVA presented a number of commitments to National Commission for Markets and Competition (CNMC) to address competition issues in connection with the proposed merger with Banco Sabadell.

These measures are aimed at ensuring financial inclusion, supporting lending to small and medium-sized enterprises (SMEs) and guaranteeing competitiveness. especially in Catalonia and the Valencian Communitywhere both banks have a strong presence.

Key aspects of the proposal include BBVA’s commitment do not close branches in regions where competition is limitedand ensuring that commercial conditions remain the same for individuals and small and medium-sized businesses in zip codes served by fewer than four financial institutions.

In addition, the bank has committed to supporting all capital lines for SMEs. within 18 months after the merger and maintain the total volume of loans to SMEs that work exclusively with BBVA and Sabadell during the same period. BBVA proposed keeping SME price standards at the same level as the national average and ensuring that changes in commercial policies are transparent to Sabadell customers.

“These commitments significantly mitigate the risks identified by the CNMC, which are mainly concentrated in certain territories,” BBVA said in a press release.

BBVA received merger approval from the European Central Bank in September, but Spain’s independent competition regulator demanded additional guarantees to avoid worsening competition in the market. Carlos Torres Vila, president of BBVA, called the ECB’s provisional approval an “important milestone” that underscores the plan’s credibility and solvency. He also emphasized that “there are no problems with competition in working with Banco Sabadell.”

Risks of the BBVA-Sabadell merger related to CNMV

In its detailed report published on Wednesday, CNMC raised a number of concerns about the possible merger. Although the merger will not create municipal monopoliesmerged enterprise will dominate in 50 locationsleading to a duopoly that could limit consumer choice.

A particularly troubling issue for regulators is the downside risk availability of credit for small and medium-sized businesses due to the different levels of diversification of the two banks.

CNMC also points out the risk of branch closures.especially in underserved rural areas. The report highlights the dependence of certain demographic groups, for example, older people and economically vulnerablephysical banking services. Potential branch closures in these areas could force residents to travel long distances to get to the bank in person, exacerbating financial exclusion.

In addition, CNMC expressed concern about BBVA’s ability to automatically transfer Sabadell clients. for their own products, possibly on less favorable terms. A lack of transparency during these transitions can leave customers worse off, especially if they are unaware of better alternatives in BBVA’s portfolio.

The market for purchasing services and managing trading terminals has become the subject of special attention. The combined company will become a national leader in this market. with a market share of more than 30%. CNMC warned that this could result in higher fees for companies that rely on these services, such as higher fees or monthly charges.

Next steps and possible consequences of bank mergers

CNMC has asked for information from stakeholders including consumer groups, SMEs and competing financial institutions over the next ten days. This information will form part of the second phase of the investigation. which is expected to last until 2025.

If approved, the merger would create one of the largest financial institutions in Spain, consolidating significant market power in key regions. “The combination of BBVA and Banco Sabadell, if approved, will create a stronger and more efficient institution that will be better prepared to compete in the European and global market,” BBVA said in a report last month.

In Spain, will be the second largest banking group

in terms of loan market share, with total assets 265 billion euros. According to BBVA, the integration is expected to offer a more diversified customer offering by leveraging the complementary strengths of both banks: BBVA’s focus on retail and large corporate clients, as well as Sabadell’s strong presence among small and medium-sized businesses.

IBEX 35 reaction

BBVA shares fell by 0.7% during midday trading Thursday, marking a third straight session of losses. The decline was mainly due to worsening risk appetite amid escalation of geopolitical tensions between Russia and Ukraine, reflecting the downward trend observed in the Spanish IBEX 35 index.

Banco Sabadell shares they fell similarly by 0.7% during the session.