Spanish Government Approves BBVA’s €14 Billion Sabadell Takeover With Three-Year Merger Ban Amid TSB Sale to Santander

The Spanish government has approved BBVA's €14 billion ($16 billion) hostile takeover bid for Banco Sabadell but imposed strict conditions that prevent the two banks from merging for at least three years. The Comisión Nacional del Mercado de Valores (CNMV) temporarily suspended trading of BBVA and Sabadell shares pending the government's decision on the takeover offer. The government requires that both banks maintain separate legal identities, autonomous management, and independent operations during this period. Additionally, BBVA must protect jobs and branch networks, support financing for small and medium enterprises, and ensure financial inclusion for older and rural populations.

Following the government's ruling, BBVA is evaluating whether to continue with the offer, considering the new restrictions, and has not ruled out legal action or withdrawing the bid. Meanwhile, Banco Sabadell has decided to sell its UK subsidiary, TSB Bank, to Banco Santander for approximately £2.65 billion (around €3.4 billion or $3.6 billion). This sale, which includes an extraordinary dividend payout of about €3.8 billion to Sabadell shareholders, is seen as complicating BBVA's takeover attempt. Sabadell's CEO César González-Bueno stated the TSB sale is independent of the BBVA offer but acknowledged it increases the cost of the takeover. The transaction requires shareholder approval, with extraordinary meetings scheduled for August 6. BBVA's management remains inclined to proceed with the takeover if supported by major investors of both banks. The sale of TSB to Santander strengthens Santander's presence in the UK, making it the country's third-largest bank by deposits. The ongoing developments have created uncertainty around the future of the BBVA-Sabadell deal, with market analysts and shareholders closely monitoring the situation.