EU warns Spain against blocking BBVA-Sabadell deal

David Sackler May 28, 2025 Business Leave a comment

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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 ordered Tuesday that the bid will be fully reviewed by the cabinet. It is the latest failure in the attempt to merge two of Spain’s biggest banks.

Carlos Cuerpo said that he had sent the agreement to the Spanish cabinet. The cabinet would then have 30 days to decide if there are other reasons than the competition to place additional restrictions or conditions on the deal.

The bid has been approved already by the European Central Bank, and the Spanish Competition authority. A number of mitigations measures have also been taken to protect the 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 previously voiced its opposition to this tie-up. It would have made a combined BBVA/Sabadell the second-largest player in the country’s loan market. This would be a leapfrogging Santander while falling short of CaixaBank.

The hostile takeover bid launched in May of 2024 is Spain’s worst takeover drama in years. Sabadell’s Board, who initially rejected a BBVA friendly approach, as well the business elite of Catalonia where Sabadell roots, oppose it.

Cuerpo made its announcement after Spain’s competition authority, the CNMC (Competition and Markets Commission), announced earlier this month it had approved the takeover, subject to a few non-controversial conditions, such as BBVA maintaining the branches they had already established.

Cuerpo, the minister in charge of economic policy at the Ministry of Finance, said that the analysis carried out by his ministry on the Sabadell deal revealed the need to pay more attention to its potential impact “on job protection, financial integration and territorial cohesion”. This was a reference the importance of Sabadell to the economies of Catalonian and Valencian regions.

In a government statement, the government highlighted that this deal could have a significant impact on “research-and-technology development” and “social policy objectives”.

Cuerpo claimed that five other ministers with an interest in economics policy backed his decision.

The competition regulator’s decision largely eliminated his concerns. He had previously expressed concern that the deal could create financial instability risks in Spain by leaving the country with only three large banks.

BBVA stated that “the transaction serves Catalonia’s, Spain’s and Europe’s general interests.” BBVA has undertaken unprecedented remedies in the Spanish Financial Sector, making the transaction better for households and small businesses.

Sabadell stated: “Banco Sabadell is focused on maximising shareholder value.” Our long-term strategy is solid and credible, and our presence in stable markets allows us to be confident that it will produce greater and more sustainable returns for shareholders, while also allowing clients to enjoy a higher level 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 and its chairman Carlos Torres had originally wanted to launch their tender offer by the end of the last year, to Sabadell shareholders who will decide if the acquisition proceeds.

BBVA now needs to wait for the cabinet review to be completed and the approval from the market regulator before it can launch the bid.

If Sabadell’s shareholders accept the bid, then the Spanish government has no power to stop it. The government can veto a merger between the two banks. This could lead to BBVA owning Sabadell, but unable integrate it.

Andy Bounds, Additional Reporting in Brussels