CNMC clears Bankia-Caixabank merger with conditions

According to the CNMC, the merger affects the following markets, where both parties are simultaneously present: banking services (retail banking, corporate banking, investment banking and factoring); Point of Sale (“POS”); Automated Teller Machine (“ATM”); production and distribution of insurance; and management of pension plans and funds.

In order to address the competition risks observed during the assessment, Caixabank offered a number of remedies that allowed the CNMC to give the green light to the proposed acquisition.

1. Competition risks identified by the CNMC

After analysing the impact of the transaction on the affected markets, the CNMC concluded that it was able to raise competition concerns only in certain segments of the market for retail banking and in the ATM market.

Regarding the branch segment of the market for retail banking, the CNMC detected that the proposed merger would lead to a highly concentrated market in several Spanish regions. As a result, the CNMC conducted a local market analysis and identified 86 postal codes where the resulting entity would either be the only bank present (i.e. giving rise to a monopoly situation) or subject to weak competitive pressure because of a duopoly situation. 

The CNMC concluded that the null or reduced competitive pressure in these areas would give the resulting entity a high market power that might have negative effects for consumers. In particular, the CNMC highlighted a risk of financial exclusion in areas where only the participating companies are present, due to the possibility of closing one of the branches in those areas after the merger. The CNMC also emphasised that in those areas where the resulting entity would be subject to weak competitive pressure, business conditions for current Bankia’s customers could worsen. 

In addition, with respect to the ATM market, according to the CNMC, customers of competing financial entities that had agreements with Bankia (such as ING, Banco Sabadell and banks belonging to the Euro6000 network), may suffer negative consequences in case of a breakdown of said agreements as a result of the merger. This situation would make them unable to access Bankia’s ATM network on the same conditions as before.

2. Remedies proposed by the parties

In the light of the competition concerns identified by the CNMC, the parties proposed several remedies to achieve clearance of the merger. Specifically, in relation to the risks of financial exclusion and the possible deterioration of customers’ conditions, Caixabank has committed to undertake the following measures: 

• Refuse to leave any municipality in which one (or both) of the parties is present and there are no competing entities. 
  
  
• In the postal codes where Caixabank would benefit from a monopoly situation, do not alter the current conditions and terms for Bankia’s customers. 
  
  
• For a three-year term, in the postal codes where Caixabank would be in a duopoly situation, it should offer its products under the same conditions as those offered in the areas where it is subject to a greater competitive pressure.
  
  
• Inform Bankia’s customers both on the completion of the merger and of the potential changes in the financial products that could affect them (i.e. new applicable fees, new, comparable or better products, etc.). 

Additionally, in relation to the risks arising from the existing ATM agreements, Caixabank has committed to offer the customers of ING, Banco Sabadell and the banks of the Euro6000 network access to the ATMs which were already owned by Bankia before of the merger, for a period of 18 months and under the same economic conditions. And, in those cases where Bankia’s ATMs were closed down as a result of the merger, Caixabank has also committed to offer the same customers access to the nearest Caixbank’s ATM. 

3. New mergers on the horizon in the Spanish banking sector

Considering the relevance of the two merged entities, there is no doubt that this is a milestone transaction. However, it is not expected to be the last one in this sector in the near future. 

Indeed, the Spanish financial market has tended progressively towards concentration since the financial crisis of 2008, and it is already projected at least another merger between two relevant Spanish financial entities to create the fifth largest bank in the country, which shall be subject to the CNMC’s merger control analysis.

For further information on this case, please refer to the CNMC’s official press release. 

For more information contact Candela Sotés.