Spanish Government OKs Bbva-Sabadell, but no merger for 3 years

The Spanish government approves the merger project between Bbva and Banco Sabadell but imposing new conditions, after those already requested by the Iberian Antitrust Authority, on the former Bilbao bank.

In detail, the council of ministers chaired by Prime Minister Pedro Sanchez has decided that Bbva will not be allowed to merge with Banco Sabadell for three years (with a possible extension of another two). "The Council of Ministers decided to authorise the operation but on condition that the two entities' maintain separate legal personality and assets for a period of three years, as well as autonomy in the management of their activities," Economy Minister Carlos Cuerpo commented yesterday.

Now the dossier returns to the Bbva board, which in the coming days will have to assess whether the conditions exist to continue with the takeover bid launched 14 months ago on Sabadell or whether to abandon it. The new stakes imposed by the government are pushing back the timing of the possible merger, and Bbva's top management will therefore have to assess whether the loss of some of the hypothesised synergies will significantly reduce the combined entity's profitability. In the past few days, Bbva president Carlos Torres Vila had raised the possibility of an appeal to the Court if the government imposed new conditions on the deal. And from Brussels, the EU Commission had signalled its opposition to the Spanish government's interference.

The case, which in many ways resembles what is happening in Italy on the UniCredit-BancoBpm dossier, seems destined to open legal disputes. Unless Bbva decides to abandon the bid, aligning itself with the government's wishes.

Ever since the announcement of the deal in May 2024, various ministers of the Spanish executive had publicly spoken out against the operation, criticising the risk of the formation of a banking oligopoly (Bbva-Sabadell would have a market share close to 25%, as would Caixa and Santander) and the employment risks that would have mainly affected the region of Catalonia where Banco Sabadell is based. Reinforcing the feeling that the government was bent on having the last word on the deal, by setting penalising conditions for Bbva, was also the unprecedented choice of the Ministry of the Economy, which in May had promoted a public consultation among all Spanish citizens (not only customers or bank employees, but anyone) who had been asked to give their personal opinion on the operation.