European politicians should make way for banking M&A, says BBVA CEO
Adds context in paragraph 6-7, details in paragraphs 10, 14-15
By Andres Gonzalez and Tommy Reggiori Wilkes
LONDON, Sept 25 (Reuters) -European banks risk falling further behind global rivals if governments stand in the way of UniCredit's CRDI.MI potential takeover of Germany's Commerzbank CBKG.DE and BBVA's BBVA.MC bid for Sabadell SABE.MC, the CEO of Spain's BBVA said on Wednesday.
"If our deal doesn't happen, or that (UniCredit and Commerzbank) deal doesn't happen, it's going to be bad," Onur Genc told Reuters in an interview in London. "We will lose an amazing opportunity to create some European banks who have scale enough to better invest in technology."
UniCredit's swoop on a Commerzbank stake this month triggered fierce opposition from Berlin, with German Chancellor Olaf Scholz slamming the Italian lender's move as "an unfriendly attack".
Spain's government, while powerless to stop the takeover by BBVA, has said publicly it is against the deal.
Genc said that of the 20 largest banks globally by market capitalisation, none were from the euro zone, and soaring technology costs meant that only banks with scale could compete.
Euro zone banking supervisors have long wanted to see more banking consolidation to strengthen lenders, but theprospect of deals has been hampered by various factors including politicians' preference for home-grown champions.
Weak profitability among lenders has also held back dealmaking.
A merger between Sabadell and BBVA would create a bank with over 1 trillion euros ($1.11 trillion) in total assets.
BBVA has said that its current offer is "very attractive" and will convince Sabadell's shareholders, while Sabadell is opposed to the offer and its CEO said that the chances of the deal being successful are "very slim".
BBVA, Spain's second largest by market capitalisation, expects its competition authority to give a green light in less than two months, an early decision albeit with some conditions, and Genc said on Wednesday the lender still expected a merger to complete early next year.
The bank, which relies on Mexico for more than half of its profit, aims to increase its lending to SMEs in Spain through the acquisition.
Sabadell is present in the UK through its TSB business and BBVA's CEO said he had not made a decision if he will keep or sell TSB if the offer is successful.
"We don't know what TSB really is, we don't have the information. We need to see after the transaction happens. You sit, understand better, and go from there," Genc said.
Genc said he had previously been very negative on the Turkish economy, where the bank alsohas a presence through Garanti BBVA.
Now, he considers that the government there is "on the right track" but needs to continue working to get inflation down to single digits.
($1 = 0.8984 euros)
Reporting by Andres Gonzalez and Tommy Reggiori Wilkes; Editing by Kirsten Donovan, Elaine Hardcastle
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