Spain Govt Vows To Block Hostile BBVA Bid For Rival Bank

Spain’s second-largest bank BBVA on Thursday announced a hostile takeover bid for smaller rival Banco Sabadell but the government vowed to block the move, which would create a European giant in the sector

Spain’s second-largest bank, BBVA, has made a hostile takeover bid for its smaller rival, Banco Sabadell. However, the government has vowed to block the move, which aims to create a European banking giant.

BBVA’s bid comes after Sabadell’s board of directors rejected a merger proposal, citing undervaluation. The proposed takeover values Sabadell at nearly 11.5 billion euros and would involve an exchange of shares.

BBVA’s chairman, Carlos Torres Vila, described the offer as “extraordinarily attractive,” emphasizing the complementary nature of the two banks. If successful, the merger would establish a formidable competitor to Spain’s leading bank, Santander, as well as European giants like HSBC and BNP Paribas.

However, Prime Minister Pedro Sanchez’s government and Catalonia’s regional government, where Sabadell is based, have criticized the move. Labour Minister Yolanda Diaz expressed concerns about potential job losses, while Economy Minister Carlos Cuerpo indicated that the government would scrutinize the operation.

BBVA remains optimistic, believing that the government and other authorities will recognize the value of the merger, which it argues would enhance lending capacity to businesses and individuals.

The proposed takeover must receive approval from the European Central Bank and competition authorities in relevant countries. Ultimately, Sabadell’s shareholders will decide on the bid.

Meanwhile, on the Madrid stock exchange, Sabadell’s shares rose, while BBVA’s fell. Unions have also voiced opposition, fearing job losses and warning of potential negative impacts on competition and financial inclusion.