Market and policy climate

Market climate

How would you describe the current market climate for M&A activity in the financial services sector in your jurisdiction?

It seems that 2022 has not been the best year for financial services M&A.

According to TTR’s Iberian Market Third Quarter of 2022 Report, M&A transactions within the financial services industry in Spain have decreased if compared to the same period of 2021 (eg, private equity divestments relative to the same period in 2021 have decreased by 25 per cent). Per the data available up to the third quarter of 2022, in terms of M&A, the banking and financial services sector has declined in favour of other sub-sectors with very high M&A activity that year, such as real estate and IT services.

Notwithstanding, with a longer (eg, 10-year) term perspective, the sector has shown a remarkably stable – and relatively high – level of M&A activity, partly due to the intense process of restructuring of the banking segment.

Government policy

How would you describe the general government policy towards regulating M&A activity in the financial services sector? How has this policy been implemented in practice?

The Spanish government does not have a permanent, formulated policy in connection with M&A in the financial sector. The matter is left to supervisory authorities in charge of the different subsectors (the European Central Bank, the Bank of Spain, the National Securities Markets Commission, etc) which, in turn, take a neutral approach, playing their role as supervisors (normally, by issuing the necessary regulatory permits) but not getting actively involved.

That said, the latest economic crisis in Spain (2008–2012), created a need to restructure the Spanish financial system – which, due to the absolute predominance of banks as intermediaries, is, to a large extent, another way to refer to the banking system – to secure its sustainability in the long run. In this regard, Spanish (and European) authorities took action (both direct and in the form of regulatory amendments) to facilitate restructuring and concentration, not so much as a matter of policy but as a response to circumstances.

Restructuring needs have been a key driver of M&A in the financial sector recently. The same applies to technological change (in particular, in certain subsectors such as payment services), which is fostered from EU instances.

Source: Lexology