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?

Although not to the extent of other sectors such as energy or real estate, 2021 has been quite a good year for financial services M&A.

According to TTR’s Iberian Market Annual Report 2021, M&A transactions within the financial and insurance industry in Spain have increased by 36 per cent from 2020; recorded deals in 2021 amounted to 226. This places the financial and insurance industry as one of the leading subsectors in Spain M&A activity-wise. M&A activity in financial services is predominantly domestic, although the number of cross-border deals in the financial and insurance sector shows important activity involving foreign players in 2021.

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.