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S\&P: Manageable Impact Expected from Potential BBVA-Sabadell Merger
S\&P Global Ratings deems the potential BBVA-Sabadell merger manageable for BBVA's capital and non-harmful to competition, while viewing Sabadell as independently viable; they predict further domestic consolidation in Spain's banking sector, with 2024 as the peak for profitability and increasing risks from cyberattacks.
- What are the long-term implications for the Spanish banking sector and what key risks does S\&P highlight?
- S\&P anticipates further consolidation among mid-sized European banks, including in Spain, driven by the lack of a European banking union. They expect 2024 to be the peak year for Spanish bank profitability, but it will remain solid, with Spanish banks widening their profitability gap over European peers, even considering the bank tax. Cyberattacks are identified as an increasing risk.
- What is the immediate impact on BBVA and Sabadell if the merger proceeds, according to S\&P Global Ratings?
- S\&P Global Ratings believes a potential merger of BBVA and Sabadell would have a manageable impact on BBVA's capital, and that the integration would not harm market competition, based on observations in other countries with similar experiences. If the takeover bid fails, S\&P is not concerned about Sabadell's business model, considering it viable to continue independently.
- What are the broader implications of this potential merger for the Spanish banking sector's competitive landscape?
- S\&P's positive outlook on Sabadell is unrelated to the merger bid; it's based on Sabadell's recent profitability and future potential (ROE exceeding 11% this year). The agency estimates a 40-basis-point impact on BBVA's capital if the merger proceeds, but cannot predict if a better offer will be made or its effect on BBVA's financials.
Cognitive Concepts
Framing Bias
The framing is largely positive towards the potential merger, emphasizing S&P's view of a 'manageable' impact on BBVA's capital. The positive rating outlook for Sabadell is highlighted, while potential downsides are minimized. The headline (if one existed) likely would have emphasized the 'manageable' impact or Sabadell's viability. The introduction would likely have led with S&P's positive assessment.
Language Bias
The language used is generally neutral, using terms like 'manageable impact' and 'viable.' However, the repeated emphasis on positive aspects, such as 'positive perspective' and 'solid profitability,' could subtly influence the reader towards a favorable view. The description of the potential merger impact as 'not very significant' might downplay potential concerns.
Bias by Omission
The analysis focuses primarily on S\&P Global Ratings' perspective and doesn't include dissenting opinions or analyses from other rating agencies or financial experts. The article omits discussion of potential negative impacts of the merger beyond S&P's assessment, such as potential job losses or effects on smaller businesses. While acknowledging the CNMC's ongoing evaluation, it doesn't detail the CNMC's specific concerns or counterarguments.
False Dichotomy
The article presents a somewhat simplistic eitheor scenario regarding the Sabadell-BBVA merger: either the merger happens with a manageable impact, or Sabadell continues independently and remains viable. Nuances such as the potential for a less successful outcome for Sabadell if it remains independent, or for BBVA if the merger is more costly than anticipated, are not explored.
Sustainable Development Goals
The article discusses the potential merger of BBVA and Sabadell, analyzing its impact on the Spanish banking sector. A positive impact on economic growth is implied through the mention of increased profitability (ROE) for Sabadell and the overall health of the Spanish banking sector. The potential merger itself could lead to synergies and efficiencies, boosting economic activity. The analysis also points to continued growth in lending activity, further supporting economic growth. The improved ratings of Spanish banks suggest a strengthening of the financial sector, contributing to overall economic stability and growth.