Competition justifies tough analysis of BBVA’s takeover bid for Sabadell over SME lending risk | Companies

The National Markets and Competition Commission (CNMC) published a note this Wednesday justifying the move to a second phase, which involves a more rigorous analysis, government intervention and an extension until spring 2025 of BBVA’s takeover of Banco Sabadell. due to possible harmful effects on SMEs. In particular, he believes that the proposed proposal could undermine lending to small and medium-sized companies, as well as jeopardize commercial conditions for this segment.

Competitors did not consider the commitments made by BBVA sufficient and expected that the deal would be approved in the first stage and before November 9. He estimates that he “cannot rule out” these harmful effects on competition in SMEs, a decline in lending and payments business. According to the newspaper, these obligations largely replicate those offered to CaixaBank when it merged with Bankia in 2020, but also include special treatment for small and medium-sized companies. And with more stringent conditions in certain aspects.

These commitments focus on five areas: the risk of deteriorating commercial conditions in retail banking, the risk of financial exclusion, a possible reduction in SME lending, deteriorating ATM conditions and risk in the payments market. In the first aspect, BBVA undertook to maintain commercial conditions in 69 zip codes in which the resulting organization would remain a monopoly, and in 91 in which it would have no competition; will maintain commercial policies for SMEs developed at the national level, using national average prices and not closing company-facing offices; also informing clients about changes in conditions.

Regarding financial exclusion, BBVA has committed to create an account for vulnerable clients, as well as to support offices that have no competition in the municipality or with only one or no competition within 300 meters, as well as in municipalities with per capita income below 10,000 Euro. like maintaining working hours in Sabadell offices with cash service. To avoid credit risk for SMEs, BBVA proposes to maintain working capital lines for one year and for 18 months for all SME loans. Finally, it also commits to maintaining access to all €6,000 ATMs, which Sabadell customers can now use free of charge, for a period of 18 months.

Regarding this sentence of what is known in the jargon as remedies, The competition revealed problems on three issues. First, he believes that applying national average prices to SMEs does not preclude the bank from making current conditions worse. It also indicates that it lacks sufficient information to conclude that the commitments provided as part of SME loan servicing are likely to be sufficient and effective in preventing this risk. This organization also points out that what is offered in the payments is insufficient and not very specific.

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