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Spain’s competition watchdog has approved BBVA’s €11bn hostile bid for rival lender Sabadell, paving the way for the country’s government to have the final say on the drawn-out takeover battle.
The CNMC, Spain’s antitrust regulator, said late on Wednesday that it had authorised the acquisition, but added that BBVA would have to accept several remedies, including a commitment to maintain branches in certain areas.
The maintenance of branches was one of several commitments that BBVA made during the investigation in a bid to allay the watchdog’s concerns. The regulator said the proposals were “adequate, sufficient and proportionate to address the problems that this merger poses for competition in the affected markets”.
A combination of BBVA and Sabadell, which has Catalan roots, would leapfrog Santander to create the second-biggest player in Spain’s loan market.
The bid, which could result in the largest European bank takeover in years, has faced fierce opposition from Sabadell’s board and Spain’s Socialist-led government.
Writing in the Financial Times this month, César González-Bueno, Sabadell’s chief executive, said the “unprecedented opposition in Spain” against the deal was “rooted in a desire to protect competition and stimulate growth”, arguing that a merger would hurt local businesses.
Carlos Cuerpo, Spain’s economy minister, previously raised concerns that it would reduce competition in Spanish banking and create financial stability risks by leaving the country with just three large banks.
The government will now have 15 days to decide whether it plans to analyse the bid. If so, it will then have a month to make a decision. While the government cannot prevent BBVA from acquiring Sabadell shares, it has the power to veto a legal merger of the two banks.
A takeover by BBVA, which makes most of its money in Mexico, would boost the lender’s presence in its domestic market. It views Sabadell’s small and mid-sized client base as the most attractive part of its business.
Sabadell’s board rejected a friendly bid from BBVA last May before the larger bank returned with a hostile approach on the same terms.
“This authorisation is not final,” CNMC said on Wednesday, adding that Cuerpo would take a decision “on whether to refer it to the council of ministers, which may, if appropriate, assess the transaction based on criteria of general interest other than competition protection”.
BBVA chair Carlos Torres Vila said: “The union with Banco Sabadell is a project of growth, which will allow us to increase our lending capacity to businesses and households by an additional €5bn per year.”
He added that the bank’s commitments were focused on “financial inclusion, territorial cohesion, credit for SMEs and the self-employed, and [preserving] competitiveness”.
Sabadell criticised CNMC on Wednesday, saying it opposed the methodology used by the regulator throughout its investigation.
The bank argued that the methodology did not allow for an “accurate assessment of the impact of the potential consolidation” on small and medium-sized enterprises.
The lender added that it would unveil a new strategic plan in the coming weeks that would outline its outlook as a “standalone entity” so shareholders would able “to compare the value creation potential of the Catalan bank with what BBVA offers”.
