Alex Trelinski
THE European Commission has- as expected- opened an investigation into the Spanish government’s intervention over the proposed ‘hostile’ takeover of Sabadell Bank by BBVA.
Last month the government approved the €11 billion move but with many provisos.
They include the entities being unable to merge for at least three years with an option for an extra two years.
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No redundancies would be permitted at either bank during the period in addition to making changes to branches.
The BBVA chairman, Carlos Torres, said was ‘illegal’ for the government to impose such conditions and and said the bank might back out.
Sabadell in turn is boosting its coffers to keep its shareholders sweet by selling off the TSB in the UK to Spanish rival Santander.
A statement from Brussels on Thursday said: “The Commission considers that certain provisions of Spanish banking law and Spanish competition law, which give the Spanish government unlimited powers to intervene in mergers and acquisitions of banks, infringe the exclusive competences of the European Central Bank and national supervisors,”
The bottom line is that the EU sees a contradiction in member states supporting a Banking Union across the bloc with banks merging and growing in size, but governments then getting cold feet when it actually happens like in the BBVA-Sabadell case.
The investigation process will see Spain’s Economy Ministry receive a letter from the European Commission where it will have two months to respond over why EU laws are not being followed.
If the response is unsatisfactory to the Commission, it will send its opinion to Madrid with two months to adhere to what it wants.
In turn, the whole matter could go to a European court in what might be a lengthy process with the possibility that if a judgement goes against Spain, it might be hit with a hefty fine.
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