Catalonia, Comunitat Valenciana, Murcia or Madrid: the communities where the merger of BBVA with Sabadell is taking place

The National Markets and Competition Commission (CNMC) has decided to further analyze BBVA’s purchase offer (OPA) for Banco Sabadell. This will delay the outcome of the operation for several months and will force more public administrations to say how they see the union of two of the largest banking entities in Spain.

The CNMC confirmed on Tuesday that it will request “a mandatory report from the autonomous communities in which the concentration has a significant impact.” In this way, during Phase 2 of its analysis, Competition will ask the communities where there is more overlap in the activity of BBVA and Sabadell to detail how a union of banks that is known to be going to affect their territory will be affected. delve into branch closures and job cuts.

The autonomous communities where the future BBVA with Sabadell will have the most weight are Catalunya, Comunitat Valenciana and Murcia. Also Andalusia, Madrid, Euskadi, Asturias and Galicia, as can be seen in the following graph, which details how many branches each of the two banks has, municipality by municipality, according to the latest data published by the Bank of Spain.

Two banks resulting from mergers with savings banks

It must be remembered that both BBVA and Sabadell have been the main protagonists of the banking integration that has been 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 exposure. to the brick.

In the case of Sabadell, because the defunct Mediterranean Savings Bank (CAM) was awarded, with a strong presence in the Valencian Community and Murcia. He also kept Banco Gallego. In the case of BBVA, it did the same with Unimm and with Catalunya Banc, which allowed it to gain strength in Catalan territory and now it would expand that 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 continuous concentration processes for years.

Competition will require this information from the autonomous communities because, by expanding the analysis on the impact of a BBVA merger with Sabadell, it has the power to demand more details from all affected parties. And, once it has all the information, it will decide whether to approve the operation, reject it or approve it but with conditions and assignments, to minimize the impact on clients’ options.

The Law on Defense of Competition states 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 this case, “the Investigation Directorate” , of the CNMC, “will request a mandatory, non-binding report from the affected Autonomous Community” which will have 20 days to issue a report.

This information will not be binding, but it will be key for the CNMC to rule and there the communities governed by the PP have shown their reluctance to the operation, in a similar way to what was expressed by the Government, which has also been critical of the impact of a greater banking concentration. For example, already in May, the president of the Generalitat Valenciana, Carlos Mazón, was “absolutely against” the merger. “It is an operation against the province of Alicante, against the Valencian Community and against the consumer,” he stated.

We will have to wait months to know what the CNMC decides and if it places conditions on the operation to approve it. From the outset it is already known that, if there is a merger, there will be branch closures.

BBVA already indicated in the summer to the National Securities Market Commission (CNMC) that it planned to close 300 offices. He spoke of “rationalization”, because in total he had 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 both entities,” Onur Genç, CEO of BBVA, then justified.

A cut in the commercial network that, apart from corporate operations, is being constantly reduced. In the last three years, the five big banks have closed 2,500 branches. In that time, Sabadell has closed more than 350 and BBVA, 225. Together, both banks would exceed 3,000 offices and would be the second entity with the largest territorial presence, only behind Caixabank. The following graph breaks down how both BBVA and Sabadell have been closing offices since 2015.

After the CNMC decision, the two banks have once again reiterated the same arguments that they have defended in recent months. On the one hand, the CEO of BBVA pointed out yesterday at a financial sector event that integration means “the creation of value. The economic rationale is undeniable. The numbers make sense,” he said. However, he also recognized that, if the CNMC opts for very strict conditions, and “if the creation of value does not exist, we have the option of withdrawing the takeover bid. We will not hesitate for a second to back out.”

Meanwhile, the CEO of Sabadell, César González-Bueno, acknowledged that the entity has already appeared before Competition to defend its interests and that if the operation is prolonged, that will help “put all things on the table” since happen “with lights and stenographers.”

If you set conditions, it will go to the Government

From now on, several scenarios are opened, depending on what the Competition decides. Furthermore, on the other hand, there is what the National Securities Market Commission (CNMV) does in the coming months, which is the one that has to decide whether to launch the acceptance period for the takeover bid, so that Sabadell shareholders can decide. whether or not they sell their shares to BBVA; or if the market supervisor waits for the CNMC’s resolution.

This body headed by Cani Fernández can approve the operation without further ado, without any conditions. Also, reject it or put clauses or requirements on BBVA. In the latter case, the entity chaired by Carlos Torres reserves the option of backing down and withdrawing the offer. In these last two scenarios, the Government’s assessment also comes into play.

The Competition Defense Law states that, if a concentration reaches the second phase of analysis and the CNMC prohibits it or subordinates it to commitments, that decision must be raised to the Minister of Economy and Finance. Right now there are two different ministries, those headed by Carlos Cuerpo and María Jesús Montero. In addition, it can be raised to the Council of Ministers “for reasons of general interest.” In that case, the Government may “confirm the resolution issued” by the CNMC Council, or “agree to authorize the concentration, with or without conditions.” In this case, its opinion “must be duly motivated by reasons of general interest other than the defense of competition” and, in addition, it may request a report from the CNMC itself, which would lengthen the process over time.