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At a Barcelona economics conference last month, headlined “Europe: wake-up call?”, Spanish Prime Minister Pedro Sánchez took to the stage and urged the continent to “wake up once and for all . . . take control of its destiny, and move from words to action”.
The EU — galvanised by US President Donald Trump’s aggressive tariff policies — is awash with talk of stimulating economies and boosting competitiveness. In particular, last year’s influential report on European competitiveness by former European Central Bank president Mario Draghi has been seized on by European Commission president Ursula von der Leyen. A commission consultation on merger rules is now under way with a view to encouraging companies to grow through acquisition and better challenge global rivals, particularly from the US.
Both the EU policy push and Sánchez’s pronouncements in Barcelona look like dream news for those pursuing mergers and acquisitions. In particular, it should be a helpful boost for the likes of UniCredit as it pursues acquisitions in Italy and Germany, and BBVA as it goes after domestic Spanish rival Sabadell.
Yet the opposite is true. Despite the fine rhetoric at both an EU and member state level, there has been stiff practical opposition to bank deals (with some small exceptions such as last week’s purchase of Portugal’s Novo Banco by France’s BPCE). Nowhere is that more true than in Spain. Only a few weeks after that Barcelona speech, Sánchez’s government placed another obstacle in the way of the proposed BBVA-Sabadell deal, referring it to a review by cabinet ministers.
Any merger must go through antitrust reviews — which BBVA-Sabadell passed, with remedies — as well as secure EU-level support, which it has. So why has the transaction so inflamed Sánchez and his government?
The original issue was the target’s resistance. Sabadell was not open to an agreed deal and when news of an approach leaked last April and BBVA decided to go hostile, the timing could not have been worse. It came just a few days before regional elections in Catalonia — Sabadell’s heartland. At the same time, mergers can be problematic for Sanchez’s socialist administration, which has made protecting jobs a top priority. Waiting for a more business-friendly government might be in vain: a general election is not due until the summer of 2027.
Tiggerish BBVA chair Carlos Torres used to describe his bid for Sabadell as “unstoppable”. Today that seems like a fanciful view. The process so far has been painful. The bank was particularly cross about what it saw as the politicisation of the antitrust process of Spain’s National Commission for Markets and Competition. BBVA eventually overcame antitrust concerns in April, after pledging remedies including protection for vulnerable customers and the maintenance of lending volumes to small to medium-sized enterprises and branch numbers.
Yet the government then launched an unprecedented public consultation as well as the cabinet review. Alarmed by the level of interference, the European Commission last month warned Spain that it did not have the legal authority to block the takeover.
Everyone knows that if Sánchez digs in his heels, he can kill the deal all the same. Further delaying tactics could trigger EU legal action, but that would be academic: the years it would take to bring infringement proceedings would render any ongoing takeover offer unworkable.
So what is the way forward? The example of another Spanish company may be instructive. The campaign by Telefónica to pursue its own agenda of mergers, in Spain and across Europe, seems to have garnered the support of the Spanish government. The quid pro quo is that newly installed chief Marc Murtra is backing the kind of diversified technology investment that the government has advocated. The snag for Torres? Murtra, a rare Spanish business figure and a friend of Sánchez’s administration, was put in position by the government after it took a 10 per cent stake in the company and forced out his predecessor.
If the wily BBVA boss can find a way to overcome Sánchez’s antipathy with investment pledges or other sweeteners — while avoiding more invasive interference — he might finally be able to put his offer to the shareholders of Sabadell. Torres is probably right that the economic interests of Spain, and Europe more broadly, would be advanced by the deal and the signal it sends. But either way, with antitrust concerns assuaged, it should now be the shareholders and not protectionist bureaucrats who decide.
