The high concentration of the banking sector in Spain forces consumers to pay more for mortgages and charge less for deposits.

hostile takeover running BBVA at Banco Sabadell highlighted a high degree banking concentration occurred in Spain after the 2008 financial crisis, which caused the disappearance savings banks reduction in quantity financial organizations from 50 to 10 in just 15 years. This concentration allowed the three Spanish giants CaixaBank, Banco Santander and BBVA, They already control about 65% of the country’s market share.

Another consequence of the disappearance of entities is that competence market, which harms users of financial services, which has become evident since July 2022, when European Central Bank (ECB) began to increase interest rates until the price of money reaches 4.5%.

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Over this almost two-year period, Spanish banks, especially the larger ones, have decided to gradually increase the interest rates they offer their clients for time depositsThis is the opposite strategy to that followed by eurozone institutions that have decided to open the profitability tap for savers.

According to the latest ECB data, the average interest rate that Spanish banks offered in February for their depositterms less than one year was in 2.37%, before 3.2% average of European banks. For deposits over one year, Spain paid 2.47% and in the eurozone 3.02%, while for over two years the difference was 2.4% compared to 3.17%.

The lack of generosity of our banks in paying out deposits has caused their profits to rise to make the loans and mortgages they provide more expensive and do not reward savings. As a result of this strategy, they advantages they shot themselves with chains records in recent years. And this trend continues, as seen in the first quarter of 2024, when the big six Spanish banking companies – Santander, BBVA, CaixaBank, Sabadell, Bankinter and Unicaja Banco – increased profits by 6.566 million euro, which is 17.2% more than in the same period last year,

And the fact is that “the fewer banks and the larger they are, the easier it is to behave in such a way that non-competitive and therefore get monopoly or oligopoly income“, he notes Patricia SuarezPresident of Financial Users Organization To end. For this reason, he asked the National Commission for Markets and Competition and the Minister of Economy: Carlos Bodiewhich “ensure” consumer rights in the context of “increased concentration“, hinting at BBVA Hostile Takeover Proposal of Sabadell.

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A takeover bid that, if successful, would create a financial giant with Assets 986.924 million euros, which would put it in second place in Spain after CaixaBank following the takeover of Banco Santander. In addition, it will have almost 135,500 employees, a network of 7,115 offices and it will third bank in Europeafter BNP Paribas and Santander, with capitalization close to 70,000 million euros.

Neither the banking concentration nor the Sabadell takeover bid suits the government, several members said this week. The Minister of Economy was the first to speak, recalling that if the operation is successful 70% banking business National will be in the hands of three large enterprises, which he believes creates “lack of competition between organizations, as was evident in the lack of remuneration on bank deposits.”

He was not the only one, second deputy prime minister and minister of labor and social economy, Yolanda Diazalso actively opposed a hostile takeover: “This operation limits competitionThis very high risk due to the high degree of banking concentration that exists in our country and, in addition, this will have an impact on employment and especially financial exclusion.”

A non-existent risk, according to the AEB President, Alejandra Kindelanfor whom bank offer in Spain it is “huge and very diverseMeanwhile, large, small and community banks compete “fiercely” in their markets, as do digital banks that are increasingly entering the sector.

For their part, financial analysts are closer to the government’s position on the takeover bid than to that of the Bank Employers’ Association. This is the case Antonio Casteloanalyst at iBroker Global Markets, who believes that “since it is a single country integration, it can affect free competition.” However, he emphasizes that in order to avoid this, “regulators must take care of this issue and ensure that abuse does not occur.”

Sergio Avila, An IG analyst points in the same direction: “Less competition may lead to less innovation, higher prices and worse customer service” He acknowledges that there is also a “big systemic risk, because if one of these banks goes bankrupt, it could seriously affect the country’s economy. Added to this is the risk less access to credit and less financial inclusionparticularly affecting SMEs, individuals and vulnerable sectors.”

However, he believes that banking concentration also has positive aspects, including the fact that large banks “They can be more efficient. They also tend to be more stable and diversifiedwhich makes them more resilient to economic “shocks” and they have more opportunities compete abroadbenefiting the Spanish economy.”