EU Backs Bank Mergers, Criticizes Spanish Scrutiny of BBVA Bid

According to Reuters, the European Commission has warned against placing undue barriers on mergers that comply with regulatory standards, arguing that consolidation is necessary to strengthen the European banking system. The statement came shortly after Spain’s Economy Minister, Carlos Cuerpo, announced a formal government review of BBVA’s takeover bid, a rare move that introduces a new layer of uncertainty into a deal already approved by both the European Central Bank and Spain’s competition authority.

While the Spanish government cannot block BBVA from purchasing shares in Sabadell, it does have the power to halt a full legal merger. The review, announced Tuesday, gives the government until the end of June to determine whether the deal should proceed and, if so, under what conditions—particularly concerning job security and branch operations.

Per Reuters, Olof Gill, spokesperson for the European Commission’s financial services division, stated that if a deal satisfies the necessary risk and competition guidelines, there is no justification for national intervention. He emphasized that obstacles to mergers should be avoided, especially when such deals can support broader EU goals like the formation of a unified Savings and Investment Union.

Related: Spain’s Economy Ministry to Scrutinize BBVA’s Attempted Sabadell Takeover

Spain has consistently expressed concern over BBVA’s bid, first launched over a year ago. The government argues the move could threaten jobs and financial access in certain regions. However, BBVA has pledged to mitigate those concerns, reportedly agreeing with regulators to restrict branch closures and continue providing services to small and mid-sized businesses.

According to Reuters, the BBVA-Sabadell transaction is part of a wider trend of increased merger activity among European banks. Flush with capital and encouraged by regulators seeking stronger institutions, several lenders have pursued consolidation as a way to compete with banking giants in the U.S. and Asia.

Despite the momentum, political resistance remains a significant obstacle. Similar deals, including UniCredit’s efforts to merge with Germany’s Commerzbank and Italy’s Banco BPM, have faced roadblocks from respective national governments, illustrating the tension between market forces and political oversight.

Cuerpo, responding to the European Commission’s position, downplayed the tension, stating that the Spanish government respects the process and the institutions involved.

Source: Reuters