The European Central Bank gives the green light for BBVA to acquire Sabadell

Madrid. The European Central Bank (ECB) has given its approval to Banco Bilvao Vizcaya Argentaria (BBVA) to take over its smaller rival Sabadell, BBVA, Spain’s second-largest lender by market value, said on Thursday.

The ECB’s non-opposition to the deal is one of the regulatory approvals that BBVA must obtain for its hostile takeover bid worth more than 12 billion euros (13.3 billion dollars) for Sabadell.

“We hope to receive the remaining authorisations within the estimated timeframe and move forward with the most attractive project in European banking,” said BBVA Chairman Carlos Torres in a statement sent to the Spanish stock market authorities.

On May 9, Basque bank BBVA made a hostile bid for its competitor Sabadell, which rejected the offer to buy shares, leading BBVA to make a new hostile attempt to buy the fourth-largest Spanish lender, after a failed bid in 2020.

BBVA, which is proposing to exchange one of its shares for 4.83 Sabadell shares, recently approved a capital increase, the first essential step to launch an operation of such magnitude.

The second largest bank in Spain after Santander, BBVA hopes to convince a majority of shareholders in Catalan bank Sabadell, owned by a multitude of investors, including large investment funds, none of which has more than 5 percent, making the outcome of the takeover bid unpredictable.

The operation is facing strong opposition from the management of Sabadell and also faces the rejection of the Spanish government, led by the socialist Pedro Sánchez, who fears that the merger will reduce competition. The Executive “will have the last word,” warned the Minister of Economy, Carlos Cuerpo.

Since May, BBVA has received the green light for the operation from the authorities of several countries where Sabadell is present, such as the United Kingdom, the United States, France, Portugal and Morocco.

In order to complete its takeover bid, BBVA will need to obtain approval not only from the ECB but also from the Spanish banking authority, the National Securities Market Commission (CNMV) and from the competition authorities of the countries in which the two banks operate, including Spain. This obstacle course could continue for some time yet.

BBVA has a strong presence in Latin America. Mexico is its largest global market and it also has a presence in Argentina, Colombia, Peru, Uruguay and Venezuela.