Spain Blocks BBVA-Sabadell Merger for at Least Three Years

The Spanish government has said it would approve Banco Bilbao Vizcaya Argentaria’s (BBVA’s) hostile takeover of Banco de Sabadell, provided the two banks don’t legally merge for up to five years.

Spain’s Ministry of Economy, Commerce and Business said BBVA must keep its operations separate from Sabadell for at least three years; therefore, both banks and their assets are required to operate independently during that period.

Decision-making must also remain independent in key areas such as lending to small and medium-sized enterprises, human resources, branch networks, and banking services.

Remedies previously approved by Spain’s competition regulator, such as keeping certain branches open and maintaining commercial terms for specific customers, will still proceed.

Before the three-year deadline, the banks must submit reports for the cabinet to assess whether the conditions have been met. Based on this review, the government may extend the separation by another two years, delaying a full merger to five years.

The decision aims to safeguard employees, businesses, and financial customers.

BBVA made an all-share offer for Sabadell in May 2024, but after it was rejected, the bank launched a hostile bid, taking the proposal directly to shareholders. It marked BBVA’s second attempt to acquire Sabadell, following a failed bid in 2020.

While the ECB was reportedly supportive of the merger as it believed Sabadell’s focus on Spain and BBVA’s strong presence in emerging markets would create a well-diversified combined group, the Spanish government was said to oppose the deal.

Last month, the ministry referred the merger deal to the cabinet on broader public interest grounds beyond competition, citing concerns about the deal’s potential impact on the banking sector, territorial cohesion, and social policy, among other factors.