Spain’s second-largest bank BBVA on Thursday announced a bid for a hostile takeover of rival Banco Sabadell, a move which, if successful, could result in the creation of a European superbank. However, it will have to overcome significant regulatory hurdles, as the Spanish government has publicly vowed to block the move.
The takeover bid came a few days after Sabadell’s board rejected a merger proposal from BBVA because it “significantly undervalues” the bank.
According to BBVA, the hostile takeover would be carried out under the same conditions as the initial approach — an exchange of one new BBVA share for every 4.83 Sabadell shares. BBVA Chairman Carlos Torres Vila described the offer as “extraordinarily attractive”, and also stated that the two institutions were “complementary”.
Should BBVA’s plans come to fruition, it would create a banking powerhouse capable that will likely be larger than Santander. It would also be regionally competitive against European giants such as HSBC and BNP Paribas.
However, senior officials in Prime Minister Pedro Sanchez’s government have denounced the move, as did the regional government of Catalonia where Sabadell was founded.
Labour Minister Yolanda Diaz said it was “against Spain’s interests” and “would destroy many jobs”.
Economy Minister Carlos Cuerpo said the government would “have the last word when it comes to authorising the operation”, which he said would be “potentially damaging”.
Despite this resistance, Torres Vila stated that he believes “the government and other authorities will come to appreciate the true value of the operation”, which would increase “lending capacity” to businesses and individuals.
The takeover bid has to be approved by the European Central Bank as well as the competition authorities in the countries where both lenders operate, including Spain and the UK.