Torres believes that European authorities must “remove barriers” to allow consolidation without relaxing competition rules
Oct. 9 () –
The president of BBVA, Carlos Torres, has defended the takeover bid that he has announced to merge with Banco Sabadell in that the “most pressing” risk is no longer that the banks are “too big to fail” but rather that they are “too small to fail”. measure up.”
This message is one of those conveyed in an opinion column published this Wednesday by the Financial Times and picked up by the newspaper ‘Expansión’ and Europa Press.
Torres sends this message by framing it in the European context, where he states that mergers and acquisitions have once again taken center stage, since not only is BBVA’s offer for Sabadell on the table, but Unicredit has also taken a stake in Commerzbank bank.
“What Europe needs right now are bigger banks,” defends the president of BBVA, an idea that also links with the recent publication of Mario Draghi’s report on European competitiveness and with that of Enrico Letta, published in spring and which deals on the single market.
In both cases, the conclusion – Torres assures – is that Europe “urgently needs larger companies to compete on a global scale in crucial sectors and thus support economic growth and the generation of employment and resources to sustain the European social model.”
However, he affirms that Europe “has been left behind” and uses the example of the financial sector, since there is currently no European bank among the 25 largest entities in the world by market capitalization, a ranking that is led by American and Chinese banks and with the presence of Indian, Japanese, Canadian or Australian entities.
“In addition, competition comes from outside the traditional banking sector, including the large technology giants. And none of these large disruptors is European,” he adds.
For this reason, it maintains the need to have “bigger” banks due to the “close relationship” between scale, profitability, ability to invest in technology and innovation, due to the “strength” to finance the real economy and support GDP growth and to support the investments that are needed to face the climate challenge.
To advance these mergers and acquisitions within Europe, Torres believes that the authorities “must facilitate and remove barriers” that allow “internal consolidation or international operations”, although he specifies that betting on these alliances is not a call to “relax competition rules or reduce regulation.
“It is essential to preserve effective competition. In fact, consolidation among traditional banks should actually promote competition by strengthening the entities’ ability to compete on a global scale and offer more financing and better services to their clients,” he adds.
On the contrary, if we do not opt for banks with the scale and capacity to finance Europe’s needs, Torres predicts, there will be lower investments, an erosion of productivity and, ultimately, a “worsening” of living conditions. .
“The most pressing regulatory risk is not that banks are ‘too big to fail’ but ‘too small to measure up’, with the consequent lack of scale necessary to compete and enhance Europe’s future,” he says.
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