Spain’s competition authority, the CNMC, has granted approval for BBVA’s proposed acquisition of Banco Sabadell, but only on condition that several commitments are met within the retail banking sector if the deal, which remains subject to other approvals, ultimately moves forward.
Initially valued at approximately €12 billion when BBVA launched its hostile bid in May of last year, the acquisition already faces political resistance. Spanish media has reported that the economy ministry will now closely examine the CNMC’s report once they receive it. ALSO READ: Spanish government seeks to block BBVA’s hostile bid for rival Sabadell.
The bid still requires clearance from Spain’s stock market regulator, the CNMV, before it can formally proceed.
BBVA’s aim is to establish the country’s second-largest lender by credit volume, behind only Caixabank, with combined assets surpassing €1 trillion.
According to the CNMC, BBVA’s proposed measures to mitigate competition concerns were ‘adequate, sufficient and proportionate’.
BBVA’s Group Executive Chairman, Carlos Torres Vila, said in a statement that the remedies ‘we assume favour financial inclusion, territorial cohesion, credit for SMEs and the self-employed, and preserve competitiveness, especially in places where Banco Sabadell has a greater presence, such as Catalonia’.
Banco Sabadell, however, criticised the regulator’s approach, saying the CNMC’s analysis method was not ‘appropriate’ for evaluating the potential impact on SMEs and customers stemming from the merger. ALSO READ: Banco Sabadell rejects merger offer from BBVA.
The CNMC further determined that the proposed acquisition could hinder effective competition in certain segments of retail banking and payment services, especially in markets where the combined entity would hold a share exceeding 30%.
To ease such concerns, BBVA agreed to reduce its stakes in payment platforms including Redsys, Sistema de Tarjetas y Medios de Pago, Bizum and Servired, as required by those entities’ bylaws.
Additionally, BBVA pledged not to close branches in areas lacking another branch within 300 metres, in postal codes where per capita income is under €10,000, or in localities with fewer than three competing banks. It also committed to maintaining services in municipalities with limited banking competition.
To support SMEs and self-employed workers, BBVA has vowed to sustain existing working capital credit lines for three years, with the possibility of a two-year extension, for all clients currently served by Sabadell.
While Spanish law does not permit the government to block a takeover bid from being made, it does reserve final approval authority for any resulting merger.
Though the government’s power to intervene is restricted under competition law, the CNMC’s imposition of remedies activates a 15-business-day window for the economy ministry to escalate the matter to the cabinet.
From that point, the government would have one month to potentially veto the deal – a process informally referred to as a ‘phase 3 review’.
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