A PROPOSED takeover bid by CaixaBank for State-run entity Bankia has been approved by the National Markets and Competition Commission (CNMC), subject to certain caveats about charges for accounts and cashpoint use, and ensuring banking services continue in rural communities.
The future megabank will be a high-street leader, but Spanish and European laws would not allow the acquisition to proceed if there was any chance of its holding a near-monopoly.
Also, the merger – in practice, a buy-out by CaixaBank – will affect credit and debit card companies, card payment machines, cashpoints, and sales and administration of insurance and pension plans.
The CNMC concludes that the CaixaBank-Bankia operation will 'not prove a threat to competition principles' as either its market share 'would not be large enough to cause concern' or because 'there would be sufficient competition' to prevent a monopoly.
But this would, in fact, be the case in individual areas of operation, even if not with the takeover as a whole, meaning certain legally-binding guarantees will have to be made by the future holding company.
The CNMC has identified 21 postcodes in Spain – postcodes being the same for entire towns or, in large metropolitan areas, districts or suburbs, rather than changing by street as in some countries – where the new company would be the only bank on the high street.
It has flagged up another 65 postcodes where the resulting firm would only have one other bank as its competition.
In both cases, this means at least a very limited, or even no 'market pressure' in these areas, which would provide the CaixaBank-Bankia fusion with 'a high level of market power that could influence its behaviour'.
For example, if CaixaBank decided to close down some of its branches, where these affected the 21 postcodes in which it is the only entity, it could create a 'situation of financial exclusion' by leaving an entire village with no bank at all.
Additionally, it could be tempting for the firm to charge more in commissions and admin fees and provide poorer-quality customer service, safe in the knowledge that its captive audience did not have the choice of 'shopping' elsewhere.
This could particularly be the case with Bankia customers, given that it is their entity which will, effectively, disappear after being absorbed by CaixaBank.
Customers with ING, Banco Sabadell, or banks that form part of the Euro 6000 network, such as Kutxabank, all of which have agreements with Bankia allowing them to use its cashpoints without charge, could find they are hit with commission every time they make a withdrawal if their only available ATM is run by CaixaBank instead.
This would be 'especially noticeable' in areas where Bankia has a high number of cashpoints, says the CNMC.
CaixaBank is aware that if it wants to go ahead with the Bankia buyout, it has no choice but to find solutions to this issues first, and ensure those solutions stay in place once the deal is done, to avoid massive fines under anti-competition legislation.
To this end, CaixaBank has pledged not to leave any town or village without a bank – in the 21 postcodes where it, or Bankia, is the only entity, it will guarantee these branches remain open with the same conditions as at present; or better, but never worse.
In the other 65 postcodes where it only has one other bank as competition, CaixaBank has agreed not to provide any less-favourable conditions than it does in locations where its competition is greater.
Also, these 86 postcodes will be exempt from paying commissions for using cashpoints or over-the-counter services where they have hitherto had them free of charge via Bankia, and will inform all Bankia customers in writing with at least 30 days' notice of any changes in their financial services products that may affect them.
Customers of other banks who have been using Bankia cashpoints free of charge will be able to continue to do so once these become CaixaBank ATMs, or where cashpoints operated by their own banks nearest to a CaixaBank machine disappear, will be able to use these for free for up to 18 months.
The CNMC considers these proposals to be acceptable as conditions of the acquisition going ahead, but warns it will be keeping an eye on CaixaBank to ensure it fulfils its promises.
CaixaBank will be required to notify the CNMC of dates and deadlines for compliance to enable this surveillance.
Among other aspects which will remain as before, it is expected CaixaBank will keep its brand and logo and that these will replace those of Bankia.
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