BBVA weighs withdrawing Banc Sabadell takeover or suing Spanish government

BBVA is reportedly considering whether to withdraw its takeover bid for Banc Sabadell or take the Spanish government to court.

These are among the main potential responses from the bank - though not officially confirmed - following the Spanish government’s announcement on Tuesday that it will impose stricter conditions on the proposed acquisition.

While PM Pedro Sánchez's administration approved the deal in principle, it effectively blocked any full merger for the next three years. During that period, both banks would be required to maintain separate legal structures, assets, and operational autonomy.

This means BBVA would be unable to integrate Banc Sabadell’s workforce, close branches, or alter existing financing conditions for small and medium-sized businesses during that time.

The new conditions significantly complicate the operation, as they prevent the realization of the synergies BBVA had forecast, casting doubt on the deal’s overall feasibility.

The bank’s first official reaction came today from Peio Belausteguigoitia, head of BBVA’s operations in Spain, who said the company is "evaluating various alternatives" in response to the government's decision.

“We are analyzing the decision, and we’ll know more in the coming days,” he said.

One of the options, he acknowledged, could be withdrawing the takeover bid, while another would involve legal action against the Spanish government.

“Within the scope of our analysis of the additional conditions imposed by the government, there are various alternatives. [Legal action] is, evidently, one of them,” Belausteguigoitia said.

He also pointed out that the operation has already been approved by several key institutions, including the European Central Bank and Spain’s stock market regulator.

The CEO of Banc Sabadell, César González-Bueno, said on Wednesday that the chances of the takeover bid moving forward have “decreased” due to the conditions imposed by the Spanish government.

González-Bueno acknowledged a “shift in tone” from BBVA following the government's announcement, saying the “circumstances have completely changed.”

“As they’ve stated, they will now have to assess whether it’s worth continuing under these conditions,” he said.

Possibilities of takeover bid

Meanwhile, César González-Bueno, Banc Sabadell's CEO, said that the "possibilities" that the takeover bid continues have "reduced" after the government's announcement on Tuesday.

"As the BBVA has accurately pointed out, it will need to decide if these conditions are good enough to continue with its takeover plans, or not," he added.

González-Bueno also addressed the sale of the TSB bank during a speech at a gathering of the Spanish financial journalists association on Wednesday.

Operation 'not viable'

The Association of Minority Shareholders of Banc Sabadell has stated that the new conditions make BBVA’s takeover offer "not viable."

In a statement released on Wednesday, the association said there is a "high probability" that BBVA will withdraw its bid.

It also argued that the offer is "not favorable" to the interests of shareholders, who would face a "significant negative tax impact" if the deal goes through.

The association warned that the takeover could have "severe economic and social consequences" in Catalonia and other regions of Spain, and emphasized the "historical importance" of Banc Sabadell and its business model.

Decision was 'technical, not political'

Spain’s economy minister Carlos Cuerpo announced the new measures on Tuesday at midday and reappeared later that night to defend the government’s decision.

Cuerpo described the conditions as “balanced” and argued they are necessary to protect the “general interest” of consumers.

He emphasized that the decision was based on “technical criteria,” not political motives, and is fully supported by legal grounds.

The minister also noted that even if there were a change in government - a possibility that has gained traction in recent weeks after a top aide to PM Sánchez was implicated in a corruption scandal - the conditions would remain in place.

EU could step in

The European Commission has stated it will exercise its powers over the BBVA–Sabadell operation "if necessary."

A spokesperson for the Commission said it could intervene to “eliminate any unjustified restriction to the single market.”

“Any measure imposed by a government to approve an acquisition must be exceptional, proportionate, and justified by reasons of general interest,” the spokesperson added.