National bank mergers must come before cross-border deals, the vice-president of the European Central Bank Luis de Guindos said on Friday, without elaborating if the ECB would approve BBVA’s takeover bid for domestic rival Sabadell.
Earlier this week, BBVA (BBVA.MC), opens new tab asked the ECB to authorise its more than 12 billion euro ($13 billion) hostile bid for Sabadell (SABE.MC), opens new tab.
“Fundamentally, what we believe creates a European banking market is cross-border mergers, but sometimes, in order to get to cross-border you have to do national ones,” De Guindos told Spanish radio station Onda Cero, when asked about BBVA’s Sabadell bid.
BBVA’s all-share offer was rejected by Sabadell last month, prompting Spain’s second-largest bank to go hostile in its latest attempt to buy the country’s fourth-largest lender after a failed attempt in 2020.
The combined group would overtake Caixabank (CABK.MC), opens new tab as Spain’s biggest bank by domestic assets in the latest consolidation drive in the country’s banking sector.
Spain’s anti-trust watchdog said on Tuesday that BBVA had sought approval for the Sabadell deal, a potential tie-up that the Spanish government has said it opposes.
On Friday, De Guindos said that the ECB’s job was not to do a review based on competition as that belongs to other authorities, such as Spanish anti-trust watchdog CNMC or even the Directorate General for Competition in Brussels.
De Guindos also said that the ECB would only analyse the potential deal from the “solvency angle.”
“There is a question that will have to be defined by the (Spanish) competition authority, which is to establish if the relevant market is the national, the regional market or even a smaller one,” De Guindos said.
The merged group would have a combined market share of 21.9% in loans, putting it below Caixabank which has a 25% market share in loans, according to BBVA, but it would have a much bigger presence in regions such as Catalonia and Valencia.
In its regulatory framework, the CNMC says that a compulsory review is needed when market share is above 30% of the relevant market.
Sabadell’s Chief Executive Officer Cesar Gonzalez-Bueno has said he believed the deal could run into regulatory hurdles related to the increased market share a combined entity would have in small and medium-enterprise lending.
