The Spanish government is taking the unusual step of opening a public consultation on a banking takeover that would lead to the merger of two of the country’s biggest lenders.
BBVA, Spain’s second-largest bank in terms of assets, has been attempting a €13 billion hostile takeover of Sabadell, the fourth largest.
The Socialist-led government has warned that a merger would destroy jobs and be bad for customers.
It has also raised concerns about the negative impact the new super-bank could have on competition in the financial market as well as worries that it could hurt the many smaller businesses which depend on credit from Sabadell.
BBVA, which has 13 million customers, has become a global brand with a significant presence across Spain and Latin America. Sabadell has 6.5 million customers and its roots are in the Catalonia region. The new lender would have more than a trillion euros in assets.
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BBVA chairman Carlos Torres has argued that the merger would be good for the Spanish economy, generating a higher tax base and giving the country a stronger financial presence in Europe.
The Spanish market regulator has broadly approved the takeover, although it flagged up areas of concern, such as a possible threat to competition in areas of retail and payment services, where the new entity would exceed 30 per cent of the market share.
BBVA has sought to allay such fears, for example, by pledging not to close branches in smaller towns and keeping existing credit lines open for small and medium-sized businesses.
The government cannot block a bid outright, but it can demand tighter conditions for a deal. As it considers how to proceed, it has opened an online consultation, posted on the economy ministry’s website.
Holding a non-binding public debate like this is unprecedented for a big corporate issue, and Spanish prime minister Pedro Sánchez’s announcement of it surprised many in the country, but it reflects how thorny this potential merger has become.
The economy ministry must take the issue to a cabinet meeting later this month and the government will then have another month in which to decide whether or not to keep opposing a deal which could make waves across the Spanish and European financial sectors.
