BBVA-Sabadell banking deal is 'terrible mistake' after regulatory approval

Spain's regulatory body approved a hostile takeover by the Basque bank BBVA of the Catalan bank Sabadell on Wednesday night, following months of analysis. 

Hours later, BBVA celebrated the decision as it will "benefit the financial inclusion, territorial cohesion, and loans to small and medium-sized enterprises (SMEs) and freelancers," Carlos Torres, BBVA president, said.

"A union with Banc Sabadell is a project focused on growth, which will also allow us to increase the capacity to grant loans to companies and families with an extra of €5 billion annually," he added.

However, Sabadell stated that they are opposed to the methodology used by the Comisión Nacional de los Mercados y la Competencia (CNMC). Bank officials say that the process is "not adequate" as it does not analyze the situation that SMEs will face after the hostile takeover.

Small shareholders

Banc Sabadell's majority of shareholders are individuals and small companies who own part of the bank. The association of minority shareholders of Banc Sabadell believes that the CNMC's credibility is "inexistent" after the approval was leaked to the press before it was officially announced.

The president of the association, Jordi Casas, urged for an "informative report" in an interview with the Catalan public news channel 324, as the leaks happened when the stock market was still open.

"This is something very serious," he added and warned that not even large funds will take part in the hostile takeover as they are just "going to lose money."

Part of Catalonia

Catalan president Salvador Illa said that Banc Sabadell is part of "Catalonia's historic and traditional banking system that looks after its businesses and its companies with a social approach."

He also warned that the Catalan executive, despite lacking any voting power, will thoroughly study the report and all its data to develop a coherent action plan to defend Catalonia's interests.

The Socialist Party in Catalonia, which Illa leads, also stated that it is time to "await" the Spanish government's decision and once that happens, the group "will announce its position," spokesperson Lluïsa Moret told media outlets before a demonstration organized on May 1, coinciding with International Workers' Day.

Spanish government's decision

Following the CNMC's approval, the BBVA-Banc Sabadell banking deal now requires clearance from the Spanish government. The executive is permitted to include additional conditions based on competition laws. 

Spain's labor minister, Yolanda Díaz, has already warned that the hostile takeover is a "very bad thing," as "financial democracy will be the one that loses." "We never talk about it, but it is the most important thing, such as human rights," she said in an interview with Spanish public broadcaster La 1.

She warned that the Spanish cabinet has "the last say" and "urged ministers to do what we said we would do," which is to stop the "terrible mistake" that this operation represents. Díaz also pointed out that it will have "a huge impact" on Catalonia and that many sectors oppose the banking deal.

A message agreed upon by Spain's Culture Minister, Ernest Urtasun, who also stated that one of the most important lessons learned from the 2008 financial crisis is that larger banks do not guarantee financial stability. 

Fewer bank branches

The non-profit association specializing in the protection of financial users, Asufin, believes that the hostile takeover will result in fewer bank branches across the territory.

"The magnitude? That is something still to be analyzed, but we are very worried," Patricia Suárez, president of Asufin, told La 1.

"I find it quite harsh to see some good news for the end consumer and SMEs out of the banking deal from BBVA on Sabadell," she added.