European Central Bank signals support for BBVA’s Sabadell takeover
The European Central Bank (ECB) has indicated it will not oppose BBVA’s planned purchase of Sabadell. This stance was communicated to the Spanish bank by the ECB, according to a filing Sabadell shared with the Spanish stock market regulator. Supervisors’ role in merger reviews focuses on ensuring the resulting institution is solid and does not threaten financial stability. While this is a significant procedural step, the ECB’s favorable outlook is a prerequisite for the public acquisition offer to proceed in the required sequence.
The ECB’s Single Supervisory Mechanism (SSM) governing council held its initial discussion of the deal in July. The joint supervision teams from the ECB and Spain’s central bank presented the case, followed by a brief remarks session with Marta Delgado, the deputy governor. Later that month, the Bank of Spain’s executive committee approved sending a preliminary report to the ECB, which expressed a positive view toward not opposing the operation. In recent days the ECB’s governing council followed that recommendation, aligning with its typical practice.
The ECB’s mandate in this process is to safeguard financial stability within the euro area. It does not assess the potential impact on competition. The bank’s analysis centers on liquidity, solvency, profitability, structure, governance capacity, and the business plan of the resulting entity. The ECB notes on its website that it views cross-border banking consolidation favorably in some cases, but it does not aim to actively promote or block any form of consolidation.
BBVA’s leadership had already signaled expectations ahead of formal approval. In early May, BBVA’s president disclosed conversations with the ECB ahead of the offer and stated there were no obstacles from the ECB’s perspective; in fact, a favorable view toward consolidation was hinted. A few days later, the ECB vice president stressed the institution’s general support for consolidation in banking. In June, the deputy governor described the process as a no-objection procedure, emphasizing that the key questions are whether the deal is viable from liquidity and solvency standpoints and whether the business plan makes sense for the merged entity.
In this context, the two sides exchanged a series of public statements. BBVA’s chief executive expressed satisfaction with the decision, calling the outcome a milestone that underscores the strength of the Sabadell-BBV A project. The merged group would be anticipated to extend credit to families and businesses by about 5 billion euros annually and would pursue remaining authorizations according to the planned timetable, aiming to advance what BBVA has described as a highly attractive opportunity for European banking.
Sabadell sources indicated that the ECB’s stance was expected and does not remove the need for ongoing review by the CNMV, the CNMC, and possibly the government, which has signaled it would hold the final say. The central bank’s analysis reportedly does not delve into competitive aspects of the Spanish banking sector or the proposal’s value to Sabadell shareholders. Sabadell emphasized concerns that the transaction could hinder access to banking for small and medium-sized enterprises and warned that Sabadell shareholders should not be required to decide immediately on the deal.
BBVA projects that the global regulatory approvals should be in place roughly six months after the offer was announced on May 6, targeting early November for the closing of the acceptance period by Sabadell’s shareholders. If the proposal gains majority support, BBVA would pursue the merger, a process BBVA estimates would take another six to eight months and could conclude by mid-2025.
Circumstances and uncertainties
The timetable and process are subject to several uncertainties. A primary question remains whether the CNMC will issue its view before or after the offer’s acceptance window closes, which could influence Sabadell shareholders’ decisions. The CNMV has suggested it may wait for the competition authority’s input. A second uncertainty concerns any conditions the CNMC might require or whether the operation would enter a second-phase review, potentially prompting additional government conditions to deter the deal.
A third concern is whether the government will exercise its veto power over the merger if the offer succeeds. Such a move could dampen economic incentives for the integration, a possibility BBVA acknowledged to the U.S. regulator, though it deemed it unlikely and maintained that the deal would still be beneficial even in that scenario.
The anticipated benefits of the integration include significant annual cost savings and revenue synergies estimated at about 850 million euros before tax in Spain and Mexico. Specifically, BBVA anticipates savings of 450 million euros in administration and technology, including closing roughly 300 of the combined network’s branches, 300 million euros in lower personnel costs after workforce adjustments, and 100 million euros from reduced financing costs. The expected investment to achieve these gains is around 1.45 billion euros before tax.
Citations: Market disclosures and regulatory statements from the ECB, CNMV, CNMC, and BBVA sources are referenced in corporate communications and regulatory filings. Attribution notes are provided by the respective institutions to reflect the positions and statements reported in public briefings and regulatory updates.