European Commission challenges Spain's BBVA-Sabadell merger block
According to the EC, Spain's actions contravene European Union rules, potentially impacting the region's banking consolidation efforts.
The EC has sent a formal notice to Spain, demanding a review of its decision to impose a three-year moratorium on the BBVA-Sabadell merger.
In a statement, the EC said it 'considers that certain provisions in the Spanish banking law and in the Spanish competition law, which grant the Spanish government unrestricted powers to intervene in mergers and acquisitions of banks, impinge on the exclusive competences of the European Central Bank and national supervisors under the EU banking Regulations'.
The executive branch of the bloc went on to say that it also 'considers that those broad discretionary powers constitute unjustified restrictions to the freedom of establishment and of capital movements'.
Spain's economy minister Carlos Cuerpo, as reported by Reuters, said the country's regulations are in line with those in Europe and that the infringement procedure will not affect the cabinet's decision.
"These are two parallel processes...and we hope that in the end our legal and technical position will prevail, namely that these two regulations are perfectly aligned and that the government's actions have been entirely appropriate," Cuerpo was quoted as saying.
Under Spanish law, while the government cannot prevent BBVA from purchasing Sabadell's shares, it retains the authority to decide on the merger's progression.
Despite the conditions, BBVA has decided to proceed with its €13bn ($15.11bn) acquisition bid, with the deal currently awaiting approval from Spain's stock market supervisor.
Spain now has two months to respond to the Commission's concerns.
If the response is unsatisfactory, Brussels may issue a reasoned opinion and could eventually refer the case to the Court of Justice of the European Union.
Euro zone banking supervisors have advocated for banking consolidation to bolster the sector, though such deals have been limited due to political efforts to safeguard jobs and domestic banks.
The Commission said: 'Consolidations in the banking sector benefit the EU economy as a whole and are essential for the achievement of the Banking Union. These mergers also ensure that capital is allocated efficiently across the EU and that citizens and businesses have access to financial products at competitive prices – a key objective of the Savings and Investments Union.'
Both BBVA and Sabadell have declined to comment on the EC's legal action.
"European Commission challenges Spain's BBVA-Sabadell merger block " was originally created and published by Retail Banker International, a GlobalData owned brand.
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