BBVA and Banco Sabadell merger delayed for 3 years

Spain’s government yesterday, Tuesday June 24th, postponed a merger between banking behemoth BBVA and rival Sabadell for three years, complicating a hostile takeover effort that might create a new sector monster.

According to Economy Minister Carlos Cuerpo, the cabinet approved the takeover as long as “for three years, both companies maintain separate legal entities and assets, as well as independence in the management of their activities.”

Both banks would need to maintain autonomy in terms of funding and credit, human resources, and branch and service networks, he said at a press conference.

Cuerpo stated that the “proportionate and balanced” decision aimed to maintain “general interest criteria” such as financing for small and medium-sized firms, workforce protection, territorial cohesion, social policies, and research and technology development.

The government may opt to prolong the new requirements for another two years based on how they affect the defined criteria, Cuerpo said.

The Socialist-led coalition government had previously expressed competition worries about the hostile acquisition offer, which would result in a behemoth capable of competing with European rivals HSBC and BNP Paribas.

Although it couldn’t stop the purchase, it may apply conditions that would force BBVA to back out.

BBVA, Spain’s second-largest bank with a significant presence in Latin America and Turkey, announced their offer in May 2024.

The European Central Bank approved the operation in September of that year, and Spain’s competition authorities did so under specific circumstances in April.

Sabadell’s leadership is committed to protecting the independence of Spain’s fourth-largest bank, but small and medium-sized enterprises and consumer associations in its northeastern Catalonia region feared the loss of branches and employment.