CNMC has expanded its analysis of the BBVA-Sabadell alliance due to its possible impact on SME lending.
National Commission for Markets and Competition (CNMC) last week decided to attempt takeover of Sabadell BBVA the one who is known as second stage of analysisinstead of approving it, it is already subject to the fulfillment of certain obligations proposed by an organization of Basque origin, as it has publicly stated and expected for several months. The state agency published this Wednesday reasons this officially led him to this unusual decision. Among them, he “cannot rule out” that the operation will affect SME loanand also that the union of the two banks will lead to “duopoly structure in 50 municipalities”. In both cases the problems will be concentrated in Catalonia And Valencian Communitywhere are the provinces in which market share received enterprise in certain products will exceed 30%.
Body chaired Kani Fernandez, It thus fulfilled the legal imperative of publishing a “summary note of concentration” brought to the attention of affected and the Council of Consumers and Users to present their charges within 10 days. In the said note, he states that the analysis of the operation at the first stage “does not allow us to eliminate potential risks to competition” found in retail banking, point-of-sale (POS) and online payment markets, as well as ATMs. He also adds that “It cannot be concluded that obligations presented at the first stage (from BBVA) solve all problems identified,” therefore it was considered “necessary to continue the analysis and find out the opinion of market agents” on this matter.
Impact on SME loan This is one of the arguments in which Sabadell pays more attention oppose the operation and also in which the CNMC is less categorical. Thus, he claims that the “market test” he conducted “it wasn’t final”. banks those consulted believe that financing needs diversified SMEs can be satisfied other organizations after concentration, but association Consumers and businesses see risk. Likewise, the Competition note states that information what BBVA and Sabadell have provided in this regard was different and “complied with some disadvantages in the model presented” Catalan education about the possible reduction in credit that may arise as a result of the transaction.
At the same time, CNMC confirmed that “In-person presence is still an important element for SMEs. and what the operation leads to significant concentration And eliminates relevant competitive force in several infranational markets.” Thus, its Competition Authority could not “rule out that the operation gives rise to the risk of horizontal unilateral effects in the form reduction in SME lendingespecially in those areas in which the resulting organization acquires a significant position.”
Products, offices and ATMs
The CNMC also took into account that the bank resulting from the concentration “will have the incentive and ability to change conditions for individual clients and small and medium-sized businesses“without the risk of losing clients to another organization” in those municipalities where competition will be reduced. He also appreciated this “in the absence of transparency”BBVA could automatically switch Sabadell’s customers to its products, even if their conditions were worse. Or, if not, you could have better products and not inform your new Sabadell customers about it.
The organization also assessed the risk financial isolation: The resulting organization will not face competition in the eight municipalities (one from BBVA and seven from Sabadell) in which “closing of branches could occur.” In addition, he took into account that Sabadell Agreements with other organizations to cross-use them ATM networks with their clients, which “at least in the short term” could cause “negative consequences for a certain group of clients.”
Regarding POS terminal and payments e-commerceCNMC discovered that the resulting organization would become a market leader with share more than 30%by concentrating the second and third operators and therefore eliminating “an important competitive force”. This will lead to increased levels of concentration, which “indicates potential competitive issues.” Therefore, such an organization could have the “incentive and opportunity worsening business conditions of these services” to the businesses that hire them.
Unpublished but not enough
To resolve these problems, the company BBVA suggested series measures who described this environment as “unpublished”. Among other things, don’t close your offices where there is no other near one of the two banks; maintain business conditions for individual clients and small and medium-sized businesses in 69 postal codes in which it remained in a situation of monopoly or duopoly and in which 91 additional in which it faced competition from only two other organizations; and maintain for 18 months circulation lines to all SMEs, and the current volume of total credit to those SMEs that work with only two organizations.
“The obligations presented exceed those agreed upon in previous operations Spanish financial sector, some significantly,” defended his CEO, Onur Genchin the note. CNMC, however, didn’t think they were enough. “For this reason, it is considered necessary to continue the analysis, to find out the opinion of market agents on the above-mentioned aspects, so that its assessment is carried out taking into account the motivated responses that are received,” he said. noted.