The eventful takeover bid by BBVA against Sabadell continues to generate substantial debates: about the size of the banks, mergers and concentration. The basic questions are two. 1) In Spain (and in other EU countries) there is already too much concentration, that is, a small number of banks, to the flagrant detriment of consumers (companies and households): few megabanks in each minimarket. And 2) There is no European, cross-border bank.
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The eventful takeover bid by BBVA against Sabadell continues to generate substantial debates: about the size of the banks, mergers and concentration. The basic questions are two. 1) In Spain (and in other EU countries) there is already too much concentration, that is, a small number of banks, to the flagrant detriment of consumers (companies and households): few megabanks in each minimarket. And 2) There is no European, cross-border bank.
The president of the CNMC, Cani Fernández, recalled exactly this week that greater concentration can generate distortions. And that “they could be required” [ventas de negocios, sucursales en territorios o sectoriales por actividad] “if it is determined that this is the best way to solve the observed problem.” Retain the allusion to a problem and the need to find the manner to solve it.
There are precedents for a peaceful solution, that of Bankia-CaixaBank. But difficult to replicate directly. Well, the number of actors and real competition in relevant markets (national, Catalan, Valencian) has shrunk… after that precedent: the proof is the rigidity of the Spanish sector in passing on increases in interest rates to depositors. . So, with dozens of players, the sale of branches or customer portfolios (SMEs) of a BBVA/Sabadell amalgam to competitors could be effective; With three players, no: it would only fatten the remaining two, Santander and CaixaBank. It would solidify the oligopoly.
There are also contributions from the ECB. “What we believe gives rise to a European banking market are the [fusiones] cross-border,” Luis de Guindos rightly declared. “But sometimes,” he erred, “to get to cross-border you have to do domestic mergers.” Since there is never a stitch without a thread, let everyone interpret the intention.
The fact is that this alleged lever of a national banking merger for another European one lacks historical evidence in the EU. And scientific? The third is recommended reading. Report on financial integration, recently published by the same ECB. It notes that the progress of this integration is “disappointing”, proposes removing the “legislative barriers in crisis management”, demands more “transparency” in “structured” products, and creates the common Deposit Guarantee Fund once and for all.
The report also complains that despite the extraordinary “benefits” collected these years, banking “consolidation” has not worked. He blames “divergent tax regimes” in the Member States, different competition laws, and also “credit and consumer” protection laws. Nothing in favor of more national mergers. If anything, against: a flow of “cross-border credit” (bank in country A lends to client in country B) could help “reduce the concentration and domestic bias of its exposures by increasing diversification in different countries.” In silver: the essential thing to create European champions is to start by transnationalizing credit, not by merging national megabanks with each other. On the contrary, excessive national “concentration” and the resulting “domestic bias” constitute dangers. To “reduce”. Do not increase.
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