Spain’s finance ministry has approved BBVA’s €14 billion hostile takeover of Sabadell, but only on condition that the two banks remain completely separate for at least three years, possibly extending to five. The decree mandates distinct legal identities, management teams, balance sheets, payrolls, credit policies, and branch networks. Any branch closures or staff reductions are explicitly forbidden .
While Spain cannot block BBVA’s share acquisition, it retains final authority over full merger approval later. This mixed path allows BBVA to acquire a stake, though a full integration would remain on hold. The government argues the measure is in the public interest, protecting jobs, territorial coverage, SME lending, and consumer rights.
Impact on Projected Synergies
BBVA originally estimated €850 million in cost synergies, €450 m from administrative and IT savings, €300 m from staff reductions, and €100 m from financial efficiencies. However, maintaining personnel and branch networks undermines significant portions of these savings .
Peio Belausteguigoitia, BBVA’s Spain head, confirmed that while IT and administrative synergies could persist, the full cost-saving horizon is under review. BBVA is now intensely examining the government’s stipulations to decide whether to proceed, challenge the conditions in court, or withdraw.
RBC analysts warned that without sufficient synergies, BBVA “should walk away,” asserting the conditions greatly diminish financial justification and could burden shareholders. Other possible routes include renegotiating terms or seeking judicial relief.
Sabadell Pushes for Clearer Synergy Details
Sabadell’s CEO, César González‑Bueno, voiced that the chances of the takeover’s success have declined following the government’s new rules and BBVA’s shifting narrative. He criticized BBVA’s initial merger prospectus for lacking transparency and demanded revisions to include precise synergy calculations aligned with Sabadell’s projected dividend and share price performance.
González‑Bueno emphasized that Sabadell’s share value has surged, multiplying eightfold since 2020 and outperforming peers by 55% since April 2024, making BBVA’s offer increasingly unattractive . He underlined how shareholders now see Sabadell as delivering stronger dividends and forecasts compared to BBVA. Unless BBVA revises its offer or clarifies the tangible benefits, Sabadell may opt to remain independent .
Strategic Options and Legal Challenges
With the government’s constraints in place, BBVA faces several pathways:
- Proceed with the bid under the condition that Sabadell remains operationally independent, potentially executing a delayed merger, a structure likened to Santander’s long Post‑Banesto integration.
- Withdraw the offer to preserve shareholder value if cost and integration advantages are deemed insufficient .
- Challenge the government’s conditions legally, either through Spain’s Supreme Court or escalate to EU authorities, citing breaches of competition law, proportionality, and free capital movement .
Carlos Torres, BBVA’s chair, hinted that if conditions extend to forcing a sale of Sabadell’s UK subsidiary, TSB, BBVA would intensify its legal opposition. Meanwhile, Sabadell is exploring TSB’s sale independently, expecting offers from Santander and Barclays before July.
What Comes Next?
Next steps hinge on BBVA’s internal review of synergy viability under the constraints, with a decision expected within days. If BBVA continues, it must submit an updated prospectus to Spain’s securities regulator, CNMV, likely initiating the tender period in mid‑July .
Meanwhile, market responses have been modest: BBVA shares edged down ~2.5%, with Sabadell slightly less, as investors remain skeptical until BBVA’s strategy becomes clear .