BBVA’s bid for Banco Sabadell hit by lengthened competition review

Spanish banking giant BBVA has been told by Spain’s antitrust regulator, CNMC, that its takeover bid for Banco Sabadell would need to go through more extensive competition reviews. 

This has dealt another blow to the hostile takeover, which is worth about €11bn, according to The Financial Times, and has already taken several months. The takeover is one of the biggest in the European banking industry, with the resulting bank likely to be one of the largest in Spain. 

The decision by CNMC comes amid increased concerns about the possible effects of this takeover on fair competition in the Spanish banking market. As such, the bid will now have to go through CNMC’s phase two review. 

The regulator has also expressed worries about how a potential merger could impact services such as insurance, banking, asset management and pension plans. The Spanish government has also been reluctant to offer support to this deal for anti-competition reasons, although BBVA has already received approval by the European Central Bank (ECB). 

Back in May this year, BBVA had originally offered 1 newly issued BBVA share for every 4.83 Banco Sabadell shares. However, adjusting for BBVA’s dividend payments, the latter has now made a new offer to Sabadell, of 1 BBVA share for every 5.0196 Banco Sabadell shares. In addition to this, a cash payment of €0.29 for every 5.0196 Banco Sabadell shares is also being offered. 

Banco Sabadell continues to oppose BBVA hostile takeover

Although the increase in regulatory requirements put forward by CNMC could cause headaches for BBVA and a delay in the deal, this could come as good news for Sabadell, which has consistently voiced its opposition to the takeover. 

Josep Oliu, the chairman of Banco Sabadell, said in a press release on the bank’s website: “It is clear that the merger of BBVA and Sabadell would have a negative impact on companies, above all on SMEs, because it would hinder their access to credit and services by producing a high degree of concentration.”

Sabadell has reiterated that it feels that BBVA’s offer is too low, with shareholders also concerned that the BBVA shares being offered are less valuable, along with being riskier. 

The antitrust regulator could also require BBVA to let go of smaller, but highly profitable business clients, as part of a remedy package, should this deal go through. 

Another major concern is the impact that this takeover will have on Catalonia’s banking market, as well as its economy as a whole. This is mainly because Banco Sabadell was founded in Catalonia, with the area having a high number of both the latter’s branches, as well as BBVA’s. As such, a potential takeover could mean several branches being shut down, due to overlaps, causing job losses and economic strain.