The Spanish Council of Ministers has approved the merger between BBVA and Sabadell on the condition that, for the next three years, they maintain separate legal entities and assets, as well as autonomous management in their operations, according to Spain’s Economy Minister, Carlos Cuerpo, during a press conference in Madrid following the government’s weekly meeting.
The government may extend this requirement for an additional two years after the initial three-year period, the minister added.
Carlos Cuerpo explained that the government’s decision is based on the need to protect “general interest” principles outlined in Spanish law, which are supported by European Union court jurisprudence.
These “general interest” criteria, as stated by the minister, relate to ensuring financing for small and medium-sized enterprises, safeguarding the staff of both banks, territorial cohesion, social policy objectives (such as housing access or the banks’ foundations activities), and promoting investment in research and technology.
Carlos Cuerpo clarified that maintaining the banks as two separate entities, should the merger proceed, does not preclude BBVA from appointing the management and other executive positions at Sabadell.
The acquisition of Catalan bank Sabadell by Basque bank BBVA through a hostile takeover bid was approved by Spain’s competition authority at the end of April, but the Spanish government could still invoke “general interest” principles and intervene in the process, imposing additional conditions for the operation’s completion, which happened today.
This marks the first time the Spanish government has made such a decision in response to a takeover bid.
Sabadell opposes the bid, and both the Spanish government and Catalonia’s regional government have expressed reservations about the merger of the two Spanish banks.
In addition to political parties and governments, the bid has been criticized by about 70 business associations and unions.
Spain’s 2007 Competition Law stipulates that conditions imposed by the government must be justified by public interest reasons distinct from competition, such as national security, environmental protection, or the promotion of innovation.
BBVA launched the takeover bid a year ago.
If the takeover succeeds, the merger would create an entity with nearly one trillion euros in assets, 135,462 employees worldwide (19,213 from Sabadell), and a network of over 7,000 branches. It would become one of Europe’s major banks, surpassing CaixaBank (owner of Portugal’s BPI) in assets, and positioning itself as Spain’s second-largest bank by assets.
