A takeover bid that forgets its customers

The economic importance of Banco Sabadell in Spain is less than in Catalonia. In Catalonia, two out of three SMEs are customers of Banco Sabadell; in Spain, one out of two.

The issue of competition has been ruled on by the CNMC, but, aside from the criticism of the sole criterion used to do so—it concerns a Spanish, not a Catalan, context—there are other factors that support or disqualify the takeover bid and must be taken into account before the government authorizes or limits it. This justifies the consultation. Someone has said that "asking is always good." It's a testament to civility.

If the takeover bid goes ahead, customer service, both passive (deposit holders) and active (those seeking loans), will be adversely affected. In Catalonia, for small and medium-sized businesses, 66% of which are Sabadell customers, it will mean a significant downturn; they will lose a financing bank. With the increase in tariffs, this will have an impact on exporters. It's not entirely consistent to allocate ICO funds for this purpose while simultaneously allowing the takeover bid, which will restrict access to financing and reduce the number of banks. There are 4,000 banks in the US. Access to credit is easier than in Europe: there is a single financial market and a freer economy. The goal is to have more banks, not fewer. If the former is done to the detriment of the latter, it's detrimental to everyone.

The criticism of this argument might be that we need larger banks in Europe. The way to solve this problem is through transnational mergers. Mergers of entities operating in one part of the country neither solve the problem of bank size, nor improve service to individual customers, nor increase the volume of financing for companies.

The CNMC's reflection is that the impact on competition of a merger between two banks cannot be judged solely within Spain: it must also be viewed on a regional scale. Catalan entities and associations have appeared before the CNMC before its ruling and have not been heard. This "slammed door" provides political justification for the public consultation.

The arguments against the merger are clear: job losses, customer service is compromised, the volume of funding is reduced, and it does nothing to solve the problem of the size or transnational nature of European banks, or to strengthen the EU financial market. Criticism on these issues must be precise. Repeating headlines—"we must grow to provide good service," "globalization is the sign of the times"—can only convince the convinced. It's crude.

BBVA's television and newspaper advertisements to reinforce and defend the merger are made with the bank shareholders' vision in mind. The public isn't included. It's a short-sighted vision on BBVA's part, revealing who it cares about and who it doesn't. It doesn't do the bank any favors because the bank relies on its customers... and it seems to have forgotten them. It's not a very successful advertisement; it could have done without it, because the target audience for what it created is limited, and it would have been better to have addressed it directly.

In politics, acting on the basis of the second derivative should be done if the effects of the first are clear and discounted. Voting, as the Junts representative did, in favor of the takeover bid within the CNMC in order to be able to submit amendments to the resolution and overrule the main decision, has a drawback: of course, the Catalan government's resolution will be to authorize the takeover bid; it accepts that the main issue will be lost, presenting it as inevitable. Issues related to price are secondary; the reasons are strategic. If those who should defend Catalan companies vote in favor of the dissolution of Sabadell, it seems there is no alternative... If the Junts vote had been against the majority in the CNMC, it would now make it easier for the Spanish government to oppose it, if, as is likely, public opinion overwhelmingly opposes it.

It would be wise not to fall into the infantilism of authorizing the takeover bid on the condition that the number of branches, business appearance, and staff remain the same, but that Sabadell be integrated into BBVA. People shouldn't be considered incapable of understanding simple things. There's no greater contempt than to be thought of as a bit of a fool.

Attempting a merger with another bank now to strengthen Sabadell is prohibited by law. If it's done, legal challenges will arise and the transaction will be delayed. That's why it must be avoided.

The question now is: if, as it seems, the government wants to oppose the takeover bid, what argument can it put forward? The CNMC has ruled that it cannot use the competition authority. The remaining arguments are linked to operational issues, including the presence in Catalonia. A cynical way to prevent the transaction is to force BBVA to sell the Sabadell business in Catalonia and Valencia. But it's a decision that clearly demonstrates the government's will. There's a pertinent saying: "If you want to cross the river, you have to get your ass wet." The question is whether a decision that, for some, makes perfect sense—preventing the takeover bid—justifies the political drain of doing so. In Catalonia, yes; in Spain, it's not a given. But what's inevitable is criticism from the opposition, which the government probably already takes for granted.

The ultimate goal of avoiding a takeover bid justifies the circumstantial inconveniences. The consultation will confirm this. That's why it was done.