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The two companies are determined to follow the trend set by their European competitors
SERMEPA and Redes y Procesos agree to discuss merger
Madrid 14th October,
2008 |
Spanish card payments network processing operators SERMEPA S.A. and Redes y Procesos S.A. are exploring a possible merger. The two companies have agreed “to begin contacts that may lead to negotiations, to determine the viability, desirability, and possible terms of a merger of their processing businesses”.
If the talks should lead to a merger agreement, approval would be sought from the competent authorities, and from the governing bodies of the two firms.
The initiative comes in response both to the need to keep Spain in the forefront of the European bank services industry, and to meet the challenges and to seize the opportunities posed by the new framework of the Single Euro Payments Area (SEPA) from the strongest possible competitive position.
The European Commission and the European Central Bank have expressed their concern over the excessively large number of payments processing firms that operate in the European Union, since most are too small to compete separately with the larger operators. Both institutions have called for mergers in the payments processing industry. Some operators were quick to respond, and competition authorities have already approved the merger plans of Italy’s SIA and SSB, and the creation of the VocaLink company in the United Kingdom.
In such a context, the banks that hold the shares of SERMEPA and of Redes y Procesos believe that together they would be large and competitive enough to be among the industry’s leaders in Europe.
Their merger—in an industry where scale economies are crucial— makes sense both economically and strategically. The two firms believe that a merger would deliver benefits not only to themselves and the banks that own them, but also to the payments industry in general, to their users, and to consumers as a whole.
In announcing the merger talks, SERMEPA Chairman José Manuel Gabeiras said “thanks to the new European environment we may reach a goal that the main players in the industry have long proposed and desired”.
Redes y Procesos Chairman Jesús Arellano commented that “with this operation, our competitive position will become much more solid and strong throughout Europe”.
In 2007 SERMEPA processed a total of 1.95 billion on-line card transactions, and its technological development unit supplied solutions to the payments industries of Andorra, Mexico, Peru, Brazil, Argentina, Venezuela, and the United States.
Redes y Procesos handled 1.51 billion on-line transactions in 2007, and managed 12,680 ATMs and 458,000 point-of-sale terminals.
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