EU challenges Spain over intervention in Banc Sabadell's hostile takeover bid

The European Commission is challenging the Spanish government over its intervention in the Banc Sabadell's hostile takeover bid by the Basque BBVA bank.

In a release statement on Thursday, Brussels considered that the Spanish anti-trust law violates EU legislation, as Article 60 allows the nation's government to decide on the terms of takeover operations.

The Commission states that Spanish law could undermine the European Central Bank's (ECB) role in operations like this one.

Back in May, the Commission already announced that it would examine the handling of the takeover after Olof Gill, spokesperson for Economic Security, Trade, Financial Services, UK relations, and Customs for the European Commission, stated in general terms, that with the approval of the European Central Bank and the national competition authority, which in Spain’s case is the CNMC, “there’s no basis to block an operation through a discretionary decision by a national government.” 

If Spain does not change its law, it could be fined by the European institution.

The EC did not position itself on whether to favor the hostile takeover bid promoted by BBVA on Banc Sabadell, but in the past, eurozone officials have backed consolidated European banks to advance the sector.

The Spanish government ruled that the hostile takeover bid was legal back in late June, but with the requirement that Banc Sabadell would have to be a separate bank from BBVA for three years.

Despite the cabinet's requirements, BBVA decided to pursue its interests in acquiring the Catalan institution. This came after debating whether to withdraw the takeover plans or even sue the left-wing Spanish cabinet led by the Socialists in a coalition with Sumar.

The deal is pending final validation by the Spanish market authority before BBVA can set a deadline of between 15 and 70 days to buy more than half of the Catalan institution's shares.