The National Markets and Competition Commission (CNMC) has decided to analyze in more depth the purchase offer (OPA) of BBVA for Banco Sabadell. This will delay the result of the operation by several months and will force more public administrations to say how they envisage the union of two of the largest banking entities in Spain.
The CNMC confirmed on Tuesday that it would request “a mandatory report from the autonomous communities in which the concentration has a significant impact.” Thus, during phase 2 of its analysis, Concurrence will ask the communities where there is the most overlap in the activities of BBVA and Sabadell to detail how a union of banks which we know will affect their territory. leading to branch closures and job cuts.
The autonomous communities where the future BBVA with Sabadell will have the most weight are Catalonia, Comunitat Valenciana and Murcia. Also Andalusia, Madrid, Euskadi, Asturias and Galicia, as shown in the following graph, which details the number of branches of each of the two banks, municipality by municipality, according to the latest data published by the Bank of Spain .
Two banks resulting from mergers with savings banks
It should be remembered that BBVA and Sabadell were the main protagonists of the banking integration carried out over the last 15 years and a consequence of the bursting of the real estate bubble that took away the old savings banks due to their high level . exposure to brick.
In the case of Sabadell, it is because the defunct Mediterranean Savings Bank (CAM) was awarded, with a strong presence in the Valencian Community and Murcia. He also retained Banco Gallego. In the case of BBVA, it did the same with Unimm and with Catalunya Banc, which allowed it to strengthen itself in Catalan territory and now it will expand this position with Sabadell. In this topic we summarize how the merger of BBVA and Sabadell would affect a Spanish banking system that has been in a continuous process of concentration for years.
The competition will demand this information from the autonomous communities because, by expanding the analysis on the impact of a BBVA merger with Sabadell, it will have the power to demand more details from all parties involved. And, once in possession of all the information, it will decide to approve the operation, reject it or approve it but with conditions and missions, in order to minimize the impact on customer options.
The competition defense law specifies that, when moving to the second phase, “in the event that the concentration has a significant impact on the territory of an Autonomous Community”, as is the case, “the Directorate of investigations”, of the CNMC, “will request a mandatory and non-binding report from the Autonomous Community concerned” which will have 20 days to issue a report.
This information will not be binding, but it will be essential for the CNMC to decide and there, the communities governed by the PP have shown their reluctance with regard to the operation, like what was expressed by the government, which was also critical. of the impact of greater banking concentration. For example, already in May, the president of the Generalitat Valenciana, Carlos Mazón, was “absolutely against” the merger. “This is an operation against the province of Alicante, against the Valencian Community and against the consumer,” he said.
We will have to wait months to know what the CNMC will decide and whether it imposes conditions on the operation to approve it. From the start, we already know that in the event of a merger, there will be branch closures.
BBVA had already indicated this summer to the National Securities Market Commission (CNMC) that it planned to close 300 offices. He spoke of “rationalization”, because in total he detected 870 BBVA and Sabadell branches located less than 500 meters from each other. “It is a percentage less than 10% of the sum of the network of the two entities,” explained Onur Genç, CEO of BBVA.
A cut in the commercial network which, beyond corporate operations, is constantly being reduced. Over the past three years, the big five banks have closed 2,500 branches. During this period, Sabadell closed more than 350 and BBVA, 225. Together, the two banks would exceed 3,000 offices and would be the second entity with the largest territorial presence, behind Caixabank. The following chart shows how BBVA and Sabadell have closed their offices since 2015.
After the CNMC’s decision, the two banks once again reiterated the same arguments they have defended in recent months. On the one hand, BBVA’s CEO emphasized yesterday at a financial sector event that integration means “creating value.” The economic justification is undeniable. The numbers make sense,” he said. But he also recognized that, if the CNMC opts for very strict conditions, and “if the creation of value does not exist, we have the possibility of withdrawing the public purchase offer. We will not hesitate for a single second to withdraw. »
Furthermore, the CEO of Sabadell, César González-Bueno, recognized that the entity had already presented itself in front of the competition to defend its interests and that if the operation continued it would help “put everything on the table” because it would happen “with lights and stenographers.
If you set conditions, it will go to the government
From now on, several scenarios are open, depending on what the Competition decides. Furthermore, on the other hand, there is what the National Securities Market Commission (CNMV) is doing in the coming months, that is to say, it must decide whether it is necessary to launch the period of acceptance of the public purchase offer, so that Sabadell shareholders can decide. whether or not they sell their shares to BBVA; or if the market controller is waiting for the resolution of the CNMC.
This body headed by Cani Fernández can approve the operation without further delay, without any conditions. Also reject it or impose clauses or requirements on BBVA. In the latter case, the entity chaired by Carlos Torres reserves the possibility of backing down and withdrawing the offer. In these last two scenarios, the Government’s assessment also comes into play.
The law on the defense of competition stipulates that, if a concentration reaches the second phase of analysis and the CNMC prohibits it or makes it subject to commitments, this decision must be submitted to the Minister of Economy and Finance. There are currently two different ministries, the one headed by Carlos Cuerpo and María Jesús Montero. In addition, it can be brought before the Council of Ministers “for reasons of general interest”. In this case, the government can “confirm the resolution issued” by the CNMC Council, or “agree to authorize the concentration, with or without conditions”. In this case, his opinion “must be duly motivated by reasons of general interest other than the defense of competition” and, in addition, he can request a report from the CNMC itself, which would lengthen the procedure in the time.
