Catalan Banking Becomes a Headache for Salvador Illa

Shortly after the dismissal of PSC's trusted man at Criteria Caixa, the CNMC has given the green light to BBVA's takeover bid against Sabadell. Although this is not a guarantee that the takeover bid will happen, it is a guarantee that Salvador Illa has a problem. With the regulator's positive verdict, everything now depends on President Pedro Sánchez, who will not find it easy to dismantle the CNMC's (unanimous) resolution.

This has undoubtedly been the main topic of the Cercle d’Economia sessions, which started yesterday and were attended by Sánchez and Illa. Initially, Sánchez has cooled the possibility of the Council of Ministers authorizing the takeover bid. However, his intention to open a "public consultation" with companies, business associations, unions, etc., indicates that blocking the takeover bid is not so easy.

Why does Sánchez want to gather arguments and voices against it? Because, as we said, the CNMC's ruling has been very clear. In fact, it has been so clear that it achieved unanimity with votes from members close to PSOE and even to Junts, as in the case of Pere Soler. This undermines the Government's initial strategy, which was to rely on some dissenting vote to support their rejection.

This way, the Government, pressured by the Generalitat, moves to plan B. That is, to toughen the commitments for BBVA to carry out the takeover bid. This is where the list of opposing voices that the Government is compiling becomes valuable. The problem is that the decisive voices were those of the regulators, who have already spoken.

From here, the Government will have to justify how the bank merger is contrary to the general interest. Moreover, they will have to justify it considering that the CNMC considers BBVA's commitments "sufficient" to not harm competition. Among these commitments are not closing many branches, keeping commercial conditions, or creating specific accounts for vulnerable customers.

Salvador Illa?

Salvador Illa can do nothing more than wait, add social entities to Sánchez's "public consultation," and hope for luck. Indeed, if the Sabadell bank is lost, the PSC's Govern would receive a huge blow, both operationally and narratively.

On an operational level (political and economic), Catalonia would lose one of its banking pillars, with that center of power moving to Madrid. And, on a narrative level, Illa would have to seek an impossible balance between the idea of returning economic leadership to Catalonia and losing a bank. All this without prejudice to Puigdemont also seeking impossible balances to explain that a Junts counselor in the CNMC has voted in favor of the takeover bid.

Parallel to this, and as we explain today in E-Notícies, the socialists have lost their successor within Criteria Caixa. That is, the PSC loses the best platform in Spain to influence the Ibex 35. Definitely, the Catalonia that emerged from the procés still has a long way to go to stabilize.