Foment del Treball asks Sánchez to stop BBVA's takeover bid for Sabadell

BarcelonaThe president of the Fomento del Trabajo (Working for Labor) employers' association, Josep Sánchez Llibre, described this Monday the ruling by the National Commission on Markets and Competition (CNMC, the state competition regulator) authorizing BBVA's takeover bid for Banco Sabadell as "disappointing," "insufficient," "inappropriate," and "hasty." "We ask the Spanish government and the Prime Minister [Pedro Sánchez] to halt this operation," said Sánchez Llibre.

The employers' association, which represents large Catalan companies, was opposed from the outset to the Basque bank's attempted purchase of Sabadell, believing it would substantially reduce competition in the sector, especially SMEs' access to credit. "A resolution of this magnitude should include a more exhaustive and in-depth study of the valuation and the consequences of the credit situation," Sánchez Llibre stated in statements to the press just before attending the annual conference of the Círculo de Economía (Economics Circle), which begins this Monday in Barcelona.

Initially, when the takeover bid was launched, the Ministry of Public Works estimated that a takeover of Sabadell by BBVA would result in the loss of approximately 50% of the credit Sabadell had available to small and medium-sized businesses, i.e., €75 billion of the €150 billion allocated to the State's small businesses. However, there has recently been a "credit surge" for SMEs, so the institution now estimates the drop in credit available to Spanish SMEs at 46%, or around €70 billion, if the purchase goes ahead.

"For these reasons, we appeal to the Spanish government, for strategic reasons, for reasons of general interest, for reasons of territorial interest, in accordance with the provisions of Article 10 of the Competition Law, to halt this operation," added Sánchez Llibre regarding a possible intervention by the executive. In fact, the Spanish government is alsohas publicly positioned itself against the takeover bid Legally, the government cannot prevent BBVA from buying Sabadell, but it can add additional commitments to those already required by the CNMC of BBVA, but based on the "general interest" and not for competition reasons. Furthermore, it could also block the merger, forcing it to both banks remain as separate companies. This would make the Basque bank lose much of its appeal, since, as is usual in transactions of this type, the takeover bid seeks to merge both companies into a single one and thus be able to take advantage of synergies and improve their efficiency.

Aside from the government's role, the operation could also be halted if the majority of Sabadell shareholders vote against accepting it at a future shareholders' meeting. For the moment, Some shareholders of the Catalan bank have already expressed their opposition to the operation. publicly.

Criticisms of the content of the resolution

Sánchez Llibre criticized the CNMC's ruling—issued last Wednesday and unanimously approved by its members—for leaving out "90% of small and medium-sized businesses with a turnover between €2 million and €50 million" in the country and "60%" of all other companies from the effects of the takeover bid on access to credit. Furthermore, "all companies with a turnover of more than €50 million are also excluded," he indicated.

The employers' leader also criticized the fact that, in the competition authority's analysis, "there is a paradox" that companies that have not requested loans because they were not necessary "would also be excluded from the possible granting of credit" after the takeover bid, as well as the fact that BBVA only undertakes to guarantee "in 1.4% of the postcodes stipulated at the time" throughout the State. "Many companies that have different branches that may be located in two towns and are not included within these postcodes, would also lose the possibility of maintaining credit," he said.