SABADELL BBVA MERGER | Asturias, the second region in which banking concentration will increase the most in the event of the merger of Sabadell and BBVA

The score was formulated according to the Herfindahl-Hirschman Index (HHI), which assigns a value of 0 to a market with an infinite number of competitors and 10,000 to an extreme monopoly situation. According to the study, the merger of BBVA and Sabadell (both with corresponding sales in the Principality), as well as the integration of Caixabank and Bankia, which was carried out but had little impact in Asturias due to the low sales of the second of both companies, will entail an increase in the industry concentration index in region by 363 points.

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This degree of convergence would be only smaller than the 714 point rise in the Catalan community, the main fiefdom of Sabadell and Caixabanca, where BBVA has absorbed six former Catalan savings banks since 2012 (including Caixa Catalunya, the region’s second largest). and Caixa Sabadell) and Bankia merged the former Caixa Girona. The third region with the greatest increase in industry consolidation, with an increase of 267 points, will be the Valencian Community, where Sabadell took control of the former Alicante savings bank CAM, Caixabank took over Banco de Valencia, and Bankia established the Valencian Savings Bank. Bankaha.

The corresponding impact that the possible merger of BBVA and Sabadell will have on the composition and diversity of the Asturian banking market is explained by the large weight of both enterprises in the territory where BBVA is the successor of the Asturian Bank of Industry and Commerce and Sabadell has successively absorbed the shores of Asturias and Herrero.

After the AFI study, the Asturian Liberbank was absorbed by the Andalusian Unicaja, but this operation did not change the degree of banking concentration in the principality, given that the Malaga branch had only a few offices in the principality.

The large banking concentration that occurred in Spain after the financial crisis of the 1970s and especially since 2008 has led to a sharp decline in the number of operators in the sector. Between the 1970s and early 1980s, the financial crisis affected 56 of the country’s 110 banks, 23 rural banks, and some savings banks. Then, from the late 80s and throughout the 90s, there was a dance of large banking mergers, some of which were caused by situations of weakness caused by the annexation of smaller businesses experiencing problems in trying to top the sector’s “ranking” at any cost. and others sought to seek size in order to improve efficiency and protect themselves in the European single market, which it was feared might entail cross-border problems that subsequently did not have as significant an impact on the survival of national markets as had been anticipated.

At this time, the integration of the banks of Bilbao and Vizcaya (with the subsequent annexation of Argentaria), Central and Spanish American (later annexed by Santander) and the absorption of Banesto by Santander took place. All this blew up the traditional G7 competition, which has since been reduced to three: Santander (with its subsidiary Banesto, which continued to operate with relative autonomy), BBVA and, further back, Popular.

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In those years, there was also a quiet “revolution” in savings banks. The 76 companies that existed in 1991 were reduced to 45 in 2000 as a result of thirteen mergers carried out by 31 organizations during that decade.

The simplification of the bank card has become even more radical since 1995, when Banco Sabadell undertook a major consolidation process in the mid-market banking segment: it acquired the offices of Citibank and control of NatWest Bank España, Banco de Asturias, Banco Herrero, Atlántico and Urquijo. .

The 2008 financial crisis, which hit the Spanish sector sharply starting in 2010, was an earthquake for savings banks. Of the 45 banks that existed then, two survive as such today (Caixa Pollença and Caixa Ontiyent), the only ones that, thanks to their local implementation, were not forced to transfer their business to the newly created banks. The former savings banks, converted into banking funds, are today controlled by four banking institutions: Caixabank, Unicaja, Kutxabank and Ibercaja. The rest disappeared or survived as simple funds with non-determining stakes in banks that absorbed their financial business.

The 2010 crisis also meant a forced simplification of credit cooperative cards, particularly in the case of rural banks. Of the 81 that existed in 2007, 62 remain today.

Banking was not spared from the earthquake. In addition to the significant capital increases they undertook (savings banks did not have this option, which led to the strangulation of many of them), Santander came to the rescue of its investees Banif and Banesto by absorbing them; Popular integrated Pastor and Citibank of Spain; Sabadell remained with Gipuzcoano, and in 2017 Popular (the fourth group in the country) dissolved, dissolving into Santander. The banks of Galicia and Valencia (subsidiaries of the savings banks) were taken over by Sabadell and Caixabank.

In this context, Abanka has become a new consolidating player in this sector. The 2012 purchase of the Galician bank Etcheverría by the Banesco group, owned by the Asturian-Venezuelan banker Juan Carlos Escotet, and that operator’s takeover the following year of the Nova Galicia Banco (successor to Caixa Galicia and Caixa Nova) marked the beginning of a very combative player that has since annexed Echeverría , Banco Caixa Geral (Spanish branch of the Portuguese Caixa Geral de Depósitos), Basque Bancoa and Targobank. Along the way, he twice tried to stay at Liberbank, which finally integrated into Unicaja in 2021, and tried to take over the Spanish branch of Deutsche Bank.

Of the ten large banks concentrating the banking business today, and the defunct savings banks, only Bankinter remained outside the mergers.

The earthquake meant that the Spanish banking sector suffered one of the sharpest contractions in the number of competitors in the eurozone.

The degree of concentration achieved does not exclude the fact that Spain is one of the European countries that has paid the least on its obligations since the eurozone began raising official interest rates on July 21, 2022 for the first time since 2011.

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The bargaining power of the surviving banking groups was strengthened as the number of operators rapidly declined. But the fact that it is the fourth most hawkish country since the creation of the euro in 1999 in terms of banking concentration does not mean that it exceeds levels that regulators might consider dangerous to the free market (Spain ranks 12th out of 26 countries in the world). EU), and even more so when virtual banking has opened up a number of new opportunities. Now the new move by BBVA towards Sabadell, which will mean the merger of the second and fourth banks and which will result in the creation of the second banking group with Spanish capital (after Santander) and the first in terms of market share in Spain, will force, if finally, scrutiny from the competition authorities , who must assess to what extent we can talk about an oligopoly or, as the banking association AEB says, there is still “great competition”.

The UGT and CC OO, Sumar and some PP leaders (Carlos Mason, President of the Valencian Community) warned, as did some business and chamber organizations, of the risk that could entail for the market that only three organizations (Santander, Caixabank) and BBVA) began to control more than 70% of the country’s deposits and loans.

Another concern is the new labor changes the operation will bring, as well as the risk of new branches and ATMs closing and the threat of a continuation of the so-called banking exclusion that has left many areas without in-person rural services. and sometimes urban.

Of the 45,624 branches that existed in Spain in 2008, today only 17,679 remain. 61.25% have disappeared. Asturias, although not the most affected community, has increased in the last five years from 655 to 458, an increase of a third. And 12 of the 78 municipalities have no bank offices, although they are far from being among the worst-hit regions. Asturias, home to 2.12% of Spain’s population, has 2.59% of the country’s branches.