The Comisión Nacional de los Mercados y la Competencia (CNMC) has finally approved BBVA's hostile takeover bid for Banco Sabadell after nearly a year of scrutiny, according to sources close to the operation. The regulator, during a marathon meeting lasting over nine hours, greenlit the transaction but imposed a series of commitments aimed at protecting consumers. The transaction now moves to the government, which may expand or reduce these conditions, having frequently criticized the potential impact of the operation on the national market and employment in the regions where both entities overlap most: Catalonia and the Valencian Community.
Financial sources indicate that BBVA has accepted all issues raised by the CNMC. This means that, in essence, the operation has not been authorized with conditions (which the law defines as those imposed by the competition authority) but rather with commitments negotiated with BBVA. In an effort to facilitate the operation, BBVA has submitted up to five proposals to the regulator throughout this lengthy analysis process.
In its final stages, the CNMC decided to subject these commitments to a market test conducted in recent weeks, questioning a good number of competitors and business associations, including Pimec and CEOE, as well as consumer groups like Asufin and Adicae. Essentially, the CNMC has accepted the commitments proposed by BBVA in its latest offer. However, it has decided to toughen a specific aspect: access for small and medium-sized enterprises (SMEs) to medium- and long-term credit.
Initially, the Basque entity offered only to safeguard credit for companies that had 100% of their loans with one or both banks. Now, it must protect loans for firms receiving 85% of their credit from the involved banks. Additionally, in Catalonia and the Balearic Islands—where the combined market share of the resulting entity exceeds 30% and 10% in SMEs—BBVA will have to secure loans for SMEs with at least 50% of their credit from BBVA and Sabadell. The bank also commits to safeguarding short-term credit, for periods of less than a year.
Furthermore, BBVA will maintain a physical presence in municipalities where only one competitor exists, in 200 municipalities with a per capita income of less than 10,000 euros, and in those with fewer than 1,000 inhabitants, as well as in offices focused on businesses. It will also preserve commercial conditions in postal codes where the resulting entity holds a monopoly or has two or three competitors, totaling 168 areas. For Sabadell customers, access to ATMs will remain unchanged for 18 months. Lastly, regarding payment services, conditions will not worsen. All these commitments will last for three years, with the possibility of extending the SME loan commitment for two more years until 2030.
Sabadell had called for a tougher analysis. Specifically, the entity led by Josep Oliu believed that the only way to restore competition as it was before the takeover bid was to force BBVA to sell off part of the joint business. The CNMC's analysis, in line with what the Basque bank had advocated and considered in previous banking operations, such as the mergers between CaixaBank and Bankia or Unicaja and Liberbank, opted for behavioral remedies.
The fundamental issues have centered on commercial conditions for SMEs and retail banking, ensuring that credit is not restricted to small and medium-sized enterprises and addressing the business of point-of-sale terminals and payment methods. The CNMC's Competition Chamber met for over nine hours to study these conditions, comprising five council members, including CNMC President Cani Fernández.
Now, the final word rests with the government. By extending the CNMC's analysis of the transaction to a second phase, the law stipulates that these conditions and commitments under which the regulator has endorsed the transaction must be validated by the executive, which has repeatedly opposed the transaction. Specifically, the government can expand or lower these conditions based on factors other than pure competition, citing general interest.
The Ministry of Economy has 15 days for its analysis, and the Council of Ministers has another month to make a decision. The executive cannot prohibit the transaction outright but can impose such high conditions that it forces BBVA to withdraw its offer. “Once we receive the CNMC report, we will analyze it rigorously and in detail, as we have indicated. Until we have all the information and carry out that analysis, we will proceed with maximum caution,” sources from the Ministry of Economy stated.
After the government pronounces, and the Comisión Nacional del Mercado de Valores (CNMV) authorizes the offer document, it will be the shareholders of Sabadell who will decide whether to accept the exchange of shares—at a rate of one BBVA share and 0.7 euros in dividends for every 5.3456 Sabadell shares. However, currently, it is more profitable for them to sell their shares on the market, as Sabadell's stock trades nearly 7% above BBVA's valuation.
The resolution comes as Sabadell feels that the CNMC's verdict was anticipated. The management of the Catalan entity has never hidden its sentiment that the CNMC is merely another hurdle to overcome in this race. César González-Bueno, CEO of the bank, and Josep Oliu, president, have publicly expressed their concerns over the demands that competition authorities might impose on BBVA's operation. “I believe that the CNMC will not take a hard stance on the merger,” González-Bueno predicted.
Oliu, speaking at an event in Sabadell and visibly confident, emphasized that the CNMC has favored BBVA's opinion: “It's like asking the fox what it thinks about letting the hens go.”
Despite everything, Sabadell has never conceded defeat in its battle with the Basque bank. The Vallès entity's defense strategy emphasizes that the takeover bid is not beneficial for anyone, not even for BBVA's shareholders. “If we leave it to market forces, only one bank will remain in Spain,” Oliu has forecasted.
In the back-and-forth that both banks have maintained over the past year, the trend has been to defend opposing views with equal fervor. In response to the Catalan bank's accusations that the Basques have miscalculated the valuation of the bid, BBVA stated that it has no “intention or need” to improve its purchase offer for Banco Sabadell, among other reasons because “the market sees it very likely” that the operation will go ahead.
