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

The Spanish government has approved BBVA's €14 billion bid to acquire Banco Sabadell but imposed strict conditions that require both banks to operate as separate entities for at least three years, effectively blocking any immediate merger. The government also mandated protections for employees and branch networks, emphasizing support for SME financing and financial inclusion. Following the government's decision, the National Securities Market Commission (CNMV) temporarily suspended BBVA and Sabadell's stock trading, lifting the suspension after the announcement. BBVA is currently evaluating whether to proceed with the takeover under these new conditions, including the possibility of legal action or withdrawing the offer.

Meanwhile, Banco Sabadell has agreed to sell its British subsidiary TSB to Banco Santander for approximately £2.65 billion (around €3.4 billion or $3.64 billion), a move that complicates BBVA's hostile takeover attempt. Sabadell plans to distribute an extraordinary dividend of €3.8 billion to shareholders following the TSB sale. The sale requires shareholder approval, with two extraordinary general meetings scheduled for August 6 to vote on the transaction and the dividend. Market analysts suggest that the TSB sale and government-imposed conditions have increased the challenges for BBVA's acquisition bid, which aims to create Spain's second-largest bank by credit volume after Caixabank. BBVA's management remains cautiously optimistic about continuing the offer, contingent on investor support from both banks. The situation has created uncertainty among Sabadell shareholders, who face decisions between accepting the dividend payout or supporting BBVA's takeover bid.