By Andres Gonzalez and Jesús Aguado
LONDON/MADRID (Reuters) – Banking consolidation is not always the best way to create shareholder value and can lead to oligopolies that are bad for customers, Spain’s Sabadell Chairman Josep Oliu said on Monday.
Sabadell is trying to fend off a hostile takeover of about 12 billion euros ($13.09 billion) by rival BBVA (BME:) that the Spanish government has opposed. However, the European Central Bank approved it on September 5.
In his address to the Spanish Chamber of Commerce in London, Oliu said that consolidation is undeniably a way to strengthen the financial system, but that “increasing the relative size of an institution in a market inevitably leads to greater oligopolistic power to the detriment of consumers”.
Oliu also said the deal would have a negative impact on lending and competition in the SME segment and that competition authorities should analyze it in depth.
Last week, Spanish Economy Minister Carlos Cuerpo said the review of BBVA’s bid for Sabadell could last until the first quarter of 2025.
While Madrid believes the combination of the two banks would impact employment and customer numbers, BBVA’s Chief Executive Officer Onur Genc told Reuters last month that European banks risk falling further behind their global rivals as governments would block UniCredit’s possible takeover of German Commerzbank (ETR:) and BBVA’s bid. for Sabadell.
Oliu said banking union in Europe was hampered by factors such as the lack of a European deposit insurance scheme, but that it was desirable and would eventually be achieved.
Consolidation processes would increase value, he said, provided employees, customers, society and politicians embrace them.
“My personal opinion is that Sabadell and BBVA on their own provide more value today than they would together,” he said.
($1 = 0.9165 euros)
