As major potential bank mergers across Europe make headlines, the chair of Sabadell warned that banking consolidation isn’t always the most effective method to create shareholder value, Reuters reported.

Speaking to the Spanish Chamber of Commerce in London, Josep Oliu, chair of the fourth-largest Spanish banking group, recognized that consolidation was undeniably a way to strengthen the financial system.

However, he cautioned that increasing an institution’s relative size in a market inevitability leads to increased oligopolistic power to the detriment of consumers.

According to Oliu, a European banking union had been delayed by issues such as the lack of common deposit insurance scheme but remain both desirable and achievable in the long run.

He added that consolidation could enhance value, but only if it is supported by employees, clients, society and policymakers.

The move comes as Sabadell is set to be taken over by BBVA, which received approval from the UK’s Prudential Authority to take control of TSB, the firm’s UK banking subsidiary.

Spain’s second-largest bank initially made an all-share offer to Sabadell in May, but after it was rejected, the bank decided to go hostile, taking the offer directly to shareholders.

Speaking on the potential takeover, Oliu urged the competition authorities to analyze it in depth as the deal could have a negative impact on credit and competition in the small to medium enterprise segment.

Elsewhere in Europe, UniCredit’s potential takeover of Commerzbank has sparked concerns, with German Chancellor Olaf Scholz agreeing that hostile takeovers are not appropriate in Europe and not beneficial for banks.