Megabanks in minimarkets | Economy | EUROtoday

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The eventful takeover bid by BBVA towards Sabadell continues to generate substantial debates: in regards to the dimension of the banks, mergers and focus. The fundamental questions are two. 1) In Spain (and in different EU nations) there may be already an excessive amount of focus, that’s, a small variety of banks, to the flagrant detriment of customers (corporations and households): few megabanks in every minimarket. And 2) There is not any European, cross-border financial institution.

The president of the CNMC, Cani Fernández, recalled precisely this week that higher focus 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 downside and the necessity to discover the method to unravel it.

There are precedents for a peaceable resolution, that of Bankia-CaixaBank. But tough to copy immediately. Well, the variety of actors and actual competitors in related markets (nationwide, Catalan, Valencian) has shrunk… after that precedent: the proof is the rigidity of the Spanish sector in passing on will increase in rates of interest to depositors. . So, with dozens of gamers, the sale of branches or buyer portfolios (SMEs) of a BBVA/Sabadell amalgam to rivals might be efficient; With three gamers, no: it will solely fatten the remaining two, Santander and CaixaBank. It would solidify the oligopoly.

There are additionally 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 may be by no means a sew and not using a thread, let everybody interpret the intention.

The reality is that this alleged lever of a nationwide banking merger for an additional European one lacks historic proof within the EU. And scientific? The third is beneficial studying. Report on monetary integration, just lately revealed by the identical ECB. It notes that the progress of this integration is “disappointing”, proposes eradicating the “legislative barriers in crisis management”, calls for extra “transparency” in “structured” merchandise, and creates the widespread Deposit Guarantee Fund as soon as and for all.

The report additionally complains that regardless of the extraordinary “benefits” collected these years, banking “consolidation” has not labored. He blames “divergent tax regimes” within the Member States, totally different competitors legal guidelines, and likewise “credit and consumer” safety legal guidelines. Nothing in favor of extra nationwide mergers. If something, towards: a circulation of “cross-border credit” (financial institution in nation A lends to consumer in nation B) may assist “reduce the concentration and domestic bias of its exposures by increasing diversification in different countries.” In silver: the important factor to create European champions is to start out by transnationalizing credit score, not by merging nationwide megabanks with one another. On the opposite, extreme nationwide “concentration” and the ensuing “domestic bias” represent risks. To “reduce”. Do not enhance.

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