BBVA tries to convince CNMC to take over Sabadell, hiding clients’ conditions | Companies

BBVA is finalizing work with the National Markets and Competition Commission (CNMC) to try to get the green light for a takeover bid for Banco Sabadell as soon as possible, in the first phase. To this end, the bank, chaired by Carlos Torres, presented the Competition with commitments very similar to those that CaixaBank put forward in 2020 when merging with Bankia, according to sources familiar with the process. These are the concessions(remediesin the jargon), to which the bank undertakes to ensure that the acquisition of Sabadell does not harm competition or infringe on consumer rights. To this end, BBVA has undertaken a postcode-specific analysis with specific promises for SMEs and maintaining business conditions in the coming years.
The first stage of the competitive analysis of BBVA’s takeover bid for Banco Sabadell is nearing completion. Although the law provides for a period of one month for this first phase, the truth is that the work of the CNMC has been ongoing since May, that is, five months ago. The sensitivity of the deal and its adversarial nature delayed the body’s decision. President Cani Fernandez attributed the delay to the Congress of Deputies last month to the embattled bank’s rush to submit proposal documentation as much as possible, as well as problems comparing the information submitted. .
In this first stage, BBVA must submit its proposal for competition obligations to the CNMC. To prepare it, the bank proposed a proposal based on the merger of CaixaBank and Bankia in 2020. It preserves many of the points to which the organization led by Gonzalo Gortazar was committed. The organization raised issues such as maintaining core accounts, which the law already requires banks to do, informing customers of any changes within 18 months of a transaction, and maintaining a bank’s physical presence for at least three years. those municipalities where the merged enterprise has no competition.
The four-year-old analysis was based on postal codes in which only CaixaBank and Bankia were present, of which there are about 86. In them, the resulting bank pledged to maintain commercial terms for at least three years and not charge Bankia customers for more than three years. – counter operations. In the case of BBVA and Sabadell, the postal codes affected will be halved, 41. In some of these aspects, BBVA offers even stricter commitments than CaixaBank.
In addition, CaixaBank has committed to maintaining the Bankia ATM agreements for a period of 18 months, which in the case of Sabadell is limited to its integration of 6,000 euros. Likewise, sell certain shares in companies jointly with other banks when the share obtained as a result of the transaction exceeds the maximum thresholds established by its charter. In the case of the BBVA and Sabadell operation, the Carlos Torres entity must sell part of the shares of Redsys (a virtual payment platform with credit and debit cards), payment method company Servired and instant electronic transfer platform Bizum.
In addition, BBVA’s work in this regard will relate specifically to the small and medium-sized business segment. This is Sabadell’s main business niche and the most sensitive aspect from a competitive perspective due to concerns that reducing the number of competitors from four to three will limit SMEs’ access to credit. In this regard, BBVA undertakes to maintain the credit lines of Sabadell customers for a period of 12 months after the offer.
BBVA believes that the example of CaixaBank and Bankia is quite comparable. In fact, he generally argues that Sabadell’s amount does not reach CaixaBank’s share of any market and does not reach the minimum thresholds set by the European Commission to quarantine a transaction. But the truth is that the starting position of the Spanish banking market is more concentrated than four years ago. If the takeover takes place, the three banks (CaixaBank, Santander and BBVA with Sabadell) will control 70% of the loan and deposit market.
The situation will be more serious in some autonomous communities, mainly in Catalonia, the Valencian Community and Asturias. The Catalan employers’ association of small and medium-sized companies, Pimec, was particularly opposed to the takeover proposal. A report prepared by the organization indicates that the combined company and CaixaBank will account for 74% of the offices in Catalonia. They estimate that credit will be cut by 8%, about $54 billion. At the same time, the Catalan competition authority analyzed the deal using the Herfindahl-Hirschman Index (HHI), which measures the degree of concentration in the sector, and considers that there are risks to competition when it gives a figure exceeding 2,000 points. and an increase of more than 150 points. Catalan authorities note that the deal will increase the concentration from 2289 to 2888, an increase of 599 points.
At this stage, CNMC must decide whether to accept the commitments presented by BBVA and greenlight the deal. Or if he considers that competition could cause potential harm and therefore moves the analysis to the second stage. This means that the CNMC must listen to all parties involved (competitors, business associations, customers, political parties…) before making a determination. And then the conditions it imposes must be approved by the Council of Ministers, which can extend them. This entire process will prolong the decision until at least the summer.
“CNMC continues to work to analyze the potential competitive issues that a concentration operation may create in certain markets. The procedure continues in the first stage. The processing is currently confidential,” a CNMC spokesperson points out. BBVA sources, for their part, declined to comment.
Between them also lies the role of the National Securities Market Commission (CNMV). That regulator must decide whether to approve the deal before the CNMC makes a decision, which could happen under the law. Once that institution says yes to the deal, there will be a 15- to 70-day period during which the bank’s shareholders must decide whether or not to participate in the offer.