Analysts at the investment bank believe that there is still room for more mergers and that the Catalan entity is the main candidate to take part in the next operation.
The round of mergers in the Spanish banking sector still has new chapters to be written and will probably be led by Sabadell and one of the two largest national entities. This is the opinion of the analysts at JPMorgan, who in a recent report predict that the buyer of the bank chaired by Josep Oliu will be Santander or BBVA. It should be remembered that the American bank acted as advisor to BBVA in the talks with Sabadell which were finally broken off.
Sabadell will be an obvious target for any potential buyer, and as JPMorgan believes, these will be Santander and BBVA, who will find an effective way to achieve cost synergies through branch closures. It estimates that the branches with potential duplicates are 50% in the case of Santander and Sabadell, and 54% in the case if the Catalan bank is integrated with BBVA.
Other experts who bet on the integration of Sabadell in Santander consider that the key to this operation is TSB, because the British subsidiary only has a place in the Cantabrian bank’s business in the United Kingdom.
In its report, JPMorgan says that the mergers of CaixaBank with Bankia and of Unicaja with Liberbank will not be the only ones that will take place during the next months and gives “a high probability” that more operations will be announced as a remedy to the current environment of negative interest rates, minimum interest margins and foreseeable greater needs for provisions to respond to the crisis caused by the coronavirus pandemic.
This argument is common to the various analyses of investment banking, which have been predicting for months new consolidation operations in the Spanish banking sector to accelerate the reduction of costs and the closure of branches, as well as to neutralise “the dynamics of negative income” and to face more firmly the future post-pandemic environment, marked by a growing demand for digital banking services.
In this regard, the US bank believes that charging all customers, both retail and corporate, for their deposits is not an effective alternative for increasing revenues. This measure would barely add 10 basis points to the profitability of banks in Spain.