In Spain, the merger between BBVA and Sabadell has marked a significant shift in the banking sector, further restricting financing options for businesses—similar to the 2008 Santander UK takeover of Alliance & Leicester.
As José Roca, founding partner of Kaizen Consulting, notes in this El Mundo article, «This concentration reduces competition and makes access to credit more difficult, particularly for businesses reliant on both banks.» Given this trend, companies must anticipate these challenges and diversify their sources of liquidity.
Below is the full article where José Roca delves deeper into the implications:
«The consolidation of banks continues to tighten financing options for businesses. This is a familiar scenario for Spanish companies, which have experienced the effects of bank mergers since the 2008 financial crisis. BBVA’s bid to acquire Sabadell once again forces us to evaluate the impact on credit availability, reinforcing the need for companies to diversify their funding sources and reduce dependence on traditional banks. By turning to alternative financing markets, businesses can secure the liquidity needed to execute their plans with adequate solvency.
With fewer banks and less competition, credit access becomes increasingly restricted—especially for those already relying on both institutions for financing. Post-merger, combining previous credit amounts from both banks will likely be more challenging.
Adding to these issues are stringent regulations, shrinking credit limits for customers impacted by mergers, and the resulting liquidity bottleneck for businesses.
In 2008, Spain had more than fifty banks; by the end of 2023, that number had dwindled to just ten. The European Union is promoting bank concentration, both domestically and across borders. Recent ECB approval of the BBVA-Sabadell merger highlights this trend. Since the first wave of mergers, businesses have reduced their banking pool, and today, four banks control two-thirds of Spain’s deposits. Over half of Spanish companies count Sabadell as a key financial partner. The BBVA-Sabadell merger would further limit liquidity options within traditional banking, exacerbating an oligopolistic environment that stifles entrepreneurship.
This ongoing consolidation is likely to intensify competition reduction, driving banks to tighten credit conditions and raise service costs—a serious challenge for businesses.
In this landscape of economic instability, driven by factors such as geopolitical conflicts, fluctuating commodity prices, and technological shifts, businesses can no longer rely solely on traditional banking. Many must explore alternative financing solutions. These options, growing in prominence, are currently responsible for around 25% of company financing in Spain—a figure expected to rise, mirroring the Anglo-Saxon markets where alternative sources account for more than 70%.
Financial planning is essential for navigating these changes. Experts advise that businesses clearly define their strategic plans and ensure they have access to sufficient liquidity to execute them. Kaizen Consulting, with expertise in both traditional and alternative financing markets, assists companies of all sizes and industries in maximising their funding options.
As the banking sector consolidates, it’s time for businesses to reassess whether their financial partners are offering adequate support. Do they have sufficient credit, the right products, and favorable terms? Are they missing out on opportunities due to limited financing? With the financial landscape becoming increasingly specialised, businesses must expand their horizons and embrace new, innovative funding solutions—both domestically and internationally».
