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The European Commission is warning the Spanish government that it does not have the power to block BBVA’s €11bn hostile bid for rival lender Sabadell.
The Spanish government on Tuesday ordered that the bid be subjected to a full review by cabinet ministers, the latest setback in a year-long attempt to unite two of the country’s largest banks.
Carlos Cuerpo, Spain’s economy minister, said he sent the deal to the cabinet, which would have 30 days to decide whether there were reasons other than competition issues to impose additional conditions or restrictions on it.
The bid has already been approved by the European Central Bank and the Spanish competition authority, with a number of mitigation measures to protect consumers.
“If green lights are given on both those fronts, then — in the single market and even more so in the Banking Union — there is no basis to stop an operation based on a discretionary decision by a Member State government,” said Olof Gill, a European Commission spokesperson.
Gill also said that “banking sector consolidation — especially on a cross-border basis — will help to create a stronger, more integrated EU Banking Union, which is a vital pillar for building Europe’s future competitiveness”.
Spain’s Socialist-led government has previously voiced opposition to the tie-up, which would turn a combined BBVA-Sabadell into the second-biggest player in the country’s loan market, leapfrogging Santander but falling short of CaixaBank.
Since its launch in May 2024, the hostile bid has become Spain’s most ill-tempered takeover saga in years. It is opposed by Sabadell’s board, which initially rejected a friendly approach by BBVA, as well as the business elite in Catalonia, where Sabadell has roots.
Cuerpo’s announcement came after Spain’s competition regulator, the CNMC, said earlier this month that it had authorised the takeover subject to several non-controversial remedies, including a commitment to maintain branches that BBVA had already made.
Cuerpo said his ministry’s analysis of the deal made clear it was necessary to look more closely at its potential impact on “job protection, financial inclusion and territorial cohesion”, a reference to Sabadell’s weight in the regional economies of Catalonia and Valencia.
A government statement also highlighted the deal’s potential impact on “research and technological development, and social policy objectives”.
Cuerpo said his decision to send the deal to the cabinet was backed by five other ministries with a stake in economic policy.
He has previously raised concerns that the deal would create financial stability risks by leaving Spain with just three large banks, but the competition regulator’s ruling largely removed them from consideration.
BBVA said “the transaction serves the general interest of Catalonia, Spain and Europe. BBVA has taken on unprecedented remedies in the Spanish financial sector, which makes the transaction even better for households, the self-employed, SMEs and corporates.”
Sabadell said: “Banco Sabadell remains focused on maximising value creation. We have a solid and credible long-term plan, with a presence in stable markets, and we are fully confident that our standalone strategy will deliver greater and more sustainable shareholder returns, while allowing our clients to benefit from a higher quality of service.”
Writing in the Financial Times last month, César González-Bueno, Sabadell’s chief executive, said the “unprecedented opposition in Spain” against the deal was “rooted in a desire to protect competition and stimulate growth”, arguing that a merger would hurt local businesses.
BBVA, led by chair Carlos Torres, had initially wanted to launch its tender offer before the end of last year to Sabadell shareholders, who will decide whether the acquisition goes ahead.
Now BBVA will need to wait for the completion of the cabinet review, followed by the market regulator’s approval, before it can launch the tender.
If Sabadell shareholders then accept the takeover bid, the Spanish government can do nothing to stop it. But the government has the power to veto a legal merger of the two banks, raising the possibility that BBVA could end up owning Sabadell but unable to integrate it.
Additional reporting by Andy Bounds in Brussels
