Government's New Rope-Tightening Measures Instigated by Prime Minister Pedro Sánchez
In a notable turn of events, the Spanish government's intervention into BBVA's hostile takeover bid for Banco Sabadell has introduced fresh uncertainties and heightened hurdles towards the deal's outcome. As of late May 2025, the government has not yet made a final decision, but the intervening review process is significantly shaping the ongoing battle.
The Spanish Ministry of Economy launched an unprecedented public consultation to solicit opinions from affected stakeholders, primarily in response to regional concerns, particularly from Catalonia where Sabadell is headquartered. The catalyst for this review was the potential threat the merger posed to regional autonomy, given BBVA's Basque regional affiliation.
Although the central government lacks the power to outright prohibit BBVA from purchasing Sabadell shares, it can postpone the merger's finalization or impose stringent conditions for its completion. The Ministry of Economy has been granted 30 days to deliver a decision (scheduled to conclude approximately June 27, 2025).
Possible conditions could include preserving local branch operations and ensuring ongoing credit availability for small and mid-sized enterprises, imposing restrictions on workforce reductions and operational restructuring, and safeguarding territorial cohesion, regional economic stability, and a balanced banking sector across Spain.
Conditional approval by the Spanish competition authority (CNMC) already mandates BBVA to maintain certain branch operations and continuously support SMEs, while operational and workforce constraints could further limit BBVA's potential integration strategies, potentially resulting in job losses or service disruptions.
The final outcome depends on the Ministry's assessment and any potential action by the Council of Ministers within the stipulated deadlines, with the deal's trajectory significantly influenced by the government's review process, public consultation, and political risk factors.
The Spanish Ministry of Economy's review of BBVA's takeover bid for Banco Sabadell could potentially have far-reaching implications on the larger finance and business sectors, especially with the possibility of altered conditions or even delays in the deal's finalization. The review process, shaping up to be a critical element in these events, is not only influenced by the government's decision but also by the public consensus gathered through the ongoing consultation, political factors, and regional news.
