BBVA-Sabadell Merger Faces Government Hurdles

Spanish Banking Giants Navigate Conditions Amidst Merger Plans

The proposed merger of BBVA and Banco Sabadell is facing scrutiny after the Spanish government authorized the deal, imposing conditions to ensure fair market practices. The decision impacts both banks and highlights the complexities of consolidation within the financial sector.

Government Sets Conditions

Following authorization from the Council of Ministers, both BBVA and Banco Sabadell have publicly responded. Banco Sabadell has stated they intend to maintain their current strategy in the Valencian Community. Meanwhile, BBVA is examining the government’s conditions before deciding if they will proceed with their offer.

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“Today it was time to respond to the government and the next step is to know if BBVA continues with the OPA. Our plans are still the same and we fully trust our solo project.”

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The government’s conditions mandate that both entities maintain autonomous legal structures for at least three years, potentially extendable by two more. These conditions include separate management, assets, and operations. A recent report indicates that the Spanish banking sector is expected to see a 2.5% growth in assets in 2025 (Financial Times, 2024).

Commitments and Concerns

Banco Sabadell’s leadership, including CEO César González-Bueno, has reaffirmed its commitment to its presence in Alicante and the broader Valencian Community. Plans to maintain offices, employment, and the technology center in Aguamarga remain unchanged. The bank emphasizes its dedication to the region.

BBVA, in its own statement, is assessing the implications of the government’s conditions, which include maintaining independent operations. The Competition Commission of the Valencian Community had previously recommended against the merger, citing concerns over increased banking concentration.

Shareholder Influence

The merger’s ultimate outcome rests with Banco Sabadell’s shareholders, who will vote on BBVA’s offer. Josep Oliu, the President of Banco Sabadell, has repeatedly stated that shareholders hold the final say. He has highlighted differing business models and potential risks.

The coming months will be crucial. The CNMV must approve the offer documents, and then shareholders will decide the deal’s fate. If approved, the two banks will operate separately for at least three years, ensuring market competition. The decision will significantly reshape the banking landscape.