SPANISH BANKS LOOKING FOR MERGERS AND ACQUISITIONS

Spanish Banks Looking for Mergers and Acquisitions

Spanish Banks Looking for Mergers and Acquisitions

In the late 1980s, Spain had around 100 banks, most of which were commercial institutions serving the general public. Branches abounded in every town and city throughout the country and were as much of a landmark as the local corner shop or neighbourhood bar.

The market was dominated by seven big banks which controlled directly or indirectly around 80 percent of the country’s banking resources. These were:

 

  • Banco de Santander
  • Banesto
  • Banco Popular Español
  • Banco Central
  • Banco Hispano Americano
  • Banco de Bilbao
  • Banco de Vizcaya

With the dawn of the new Millennium, Spain’s banking map looked very different with only four big names remaining…

Consolidation in the 1990s

The liberalisation and internationalisation of Spain’s economy after it joined the European Economic Community in 1986 was a catalyst for the banks to focus on increased competitiveness. Mergers and acquisitions provided a way to cut costs as well as to achieve economies of scale and synergies. Technological innovations also helped drive this consolidation process. Here is an overview of the main deals:

1991: Banco Central merges with Banco Hispano Americano to form Banco Central Hispano Americano (BCH)

1994: Banco Santander buys Banesto at auction

1999: Banco Bilbao Vizcaya – created by the merger of Banco Bilbao and Banco Vizcaya – merges with Argentaria bank to form Banco Bilbao Vizcaya Argentaria (BBVA), currently Spain’s second biggest bank.

1999: Banco Santander and BCH merge to form Banco Santander Central Hispano (BSCH).
Santander’s tie-up with BCH brought together two of the country´s oldest and most powerful banking empires. And less than ten years later, the merged group had become the eurozone’s largest in terms of market value.

To diversify risk and offset any future downturns in its home market, Santander embarked on an aggressive acquisition drive overseas, but local retail bank Banesto was always “the jewel in the crown.” It had retained its own management team and brand despite being 90 percent-owned by Santander.

Last December, Santander decided to call an end to the 110-year old Banesto brand, announcing plans to buy out minority shareholders and close 700 branches to cut costs.

“This transaction is part of the restructuring of the Spanish financial system, which involves a significant reduction in the number of competitors and the creation of larger financial institutions,” Santander said.

Success in the bank sector reconstruction

Since 2009, there has been another raft of mergers and acquisitions to trim costs and improve efficiency and profitability. The protagonists have been the smaller retail banks and the savings banks, whose number has been cut to around 15 from 45.

In 2009, 89.1 percent of banking sector assets in Spain were in 51 institutions, compared with 13 institutions in 2012, according to date accumulated by the Bank of Spain.

For more information, contact Argali Abogados.

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