The Spanish Ministry of Economy has officially referred BBVA’s takeover bid for Banco Sabadell to the Council of Ministers, which now has one month to decide whether to impose additional requirements beyond those already mandated by the National Commission on Markets and Competition (CNMC). The government may only do so on the basis of overriding public interest. However, should the conditions undermine the profitability of the acquisition, BBVA may be forced to withdraw the bid. Legal action cannot be ruled out.
According to an official statement, the Minister of Economy is invoking reasons of general interest that extend beyond the realm of competition policy. These include the potential impact of the deal on sectoral regulatory objectives, worker protection, territorial cohesion, the promotion of research and technological development, and social policy goals.
The minister’s decision has not come as a surprise within the financial sector. Concerns about the takeover were raised by the minister from the moment the deal was first announced, a year ago. Moreover, the Ministry launched a public consultation inviting citizens to submit arguments for or against the operation.
Once an operation is referred to the Council of Ministers, Spanish law provides a 30-day window for the government to either maintain or tighten the conditions imposed by the CNMC. Any such modifications must be justified on the grounds of national public interest. This deadline falls on June 26, assuming the timeline is respected.
Although the legal framework is clear, there is growing concern that political considerations may influence the outcome. Several of the government’s parliamentary allies have publicly expressed strong opposition to the deal.
This mechanism has only been used once in Spain—during the 2012 merger of Antena 3 and La Sexta. At that time, the government, led by the People’s Party (PP), opted to ease the competition authority’s conditions.
The European Commission is closely monitoring the BBVA-Sabadell case due to concerns over potential political interference in a market-based transaction. It has been reviewing the operation under the “EU Pilot” procedure, which may lead to formal infringement proceedings if a violation of EU law is suspected, El Confidencial reported.
CNMC-Imposed Conditions
BBVA’s Chairman, Carlos Torres, was compelled to make last-minute concessions to secure approval from all five CNMC board members, including one proposed by the Catalan party Junts. Approval was ultimately granted after BBVA accepted a strengthened package of commitments, particularly concerning small and medium-sized enterprises (SMEs).
BBVA pledged to maintain long-term credit volume for three years—extendable by two more—for all SMEs with at least 85% of their financing held with BBVA and/or Sabadell. Initially, this safeguard applied only to businesses entirely reliant on both banks. In regions where BBVA-Sabadell’s combined market share exceeds 30%—notably Catalonia and the Balearic Islands—the 85% threshold has been reduced to 50%.
What Comes Next?
If the takeover succeeds, BBVA intends to fully absorb Sabadell—mirroring CaixaBank’s merger with Bankia—as a means to realize the full €850 million in projected cost synergies. However, BBVA also has a contingency plan in case the government blocks the merger. Under that scenario, Sabadell would remain a subsidiary, headquartered in Catalonia with an independent board of directors.
BBVA estimates that two-thirds of the anticipated synergies could still be achieved through technological integration, not workforce reductions. The plan includes retiring Sabadell’s technology platform and streamlining its central services, while retaining the San Cugat corporate hub.
The eventual merger would require approval by both banks’ boards and shareholders, as well as the Ministry of Economy—a step considered the most complex of nearly 30 required authorizations. BBVA’s internal timeline envisions full integration within 6–8 months, though some sources anticipate it could take up to 18 months. Notably, Carlos Torres has expressed openness to preserving the Sabadell brand in Catalonia.
The European Commission’s Response
The Spanish government’s opposition has been consistent. Following the CNMC’s conditional approval in late April, the government launched a public consultation—raising eyebrows in Frankfurt and Brussels. Although the European Commission has refrained from publicly commenting, it has been monitoring the situation since its inception.
If the Spanish government ultimately blocks the operation, the European Commission may escalate the matter to the European Court of Justice (ECJ) through infringement proceedings. According to EU law, restrictions on the fundamental freedoms of establishment and capital movement can only be justified by legitimate public interest concerns. These exceptions must be narrowly interpreted and substantiated by real and significant threats to fundamental societal interests.
Official Position
While the Commission has declined to comment publicly, a spokesperson for Financial Services, Olof Gill, stated that such operations are reviewed from both prudential and competition standpoints. If approved on both fronts, “there is no legal basis in the Single Market or the Banking Union for a Member State government to block a transaction at its discretion.” Any restrictions must be justified, proportionate, and based on legitimate public interest, Gill emphasized.
The final decision now rests with Prime Minister Pedro Sánchez’s government, which must reconcile national political dynamics with EU obligations and market expectations.
