THE Spanish government has agreed to cede some powers over banking supervision to the EU’s own bank after recent criticism of its attempts to hinder BBVA’s attempted hostile bid for smaller rival Sabadell.
The European Central Bank (ECB), one of the EU’s seven institutions with a balance sheet of around €7 trillion, will now be in charge of overseeing mergers and acquisitions like the failed deal between BBVA and Sabadell, a spokesperson for the economy ministry said.
The transfer in powers will take place when Spain implements the EU’s new capital requirements directive, a set of laws covering regulation of credit institutions and investment firms.
The directive must be implemented by January 2026.
In July, the European Commission cautioned Pedro Sanchez’s government against blocking the controversial €16 billion mega-merger of two of Spain’s largest banks, viewing Madrid’s hostility as unjustified restrictions on the free movement of capital.
“If green lights are given on both those fronts [the ECB and Spanish competition authority CNMC], then – in the single market and even more so in the Banking Union – there is no basis to stop an operation based on a discretionary decision by a member state government,” a spokesperson for the European Commission said at the time.
Ultimately, the bid from Basque-based BBVA fell flat on its face a fortnight ago after just 25.47% of Sabadell’s shareholders expressed their support for the offer.
In a surprise to observers, BBVA even failed to garner the 30% backing necessary to allow the bank to return with a second, more generous bid.
The news was welcomed by key government figures, with deputy prime minister and labour minister Yolanda Diaz calling the failed takeover ‘good news for the country’.
If successful, the merger would have created Spain’s second-biggest bank, behind only Banco Santander, which leans on a market capitalisation of €128 billion.
READ MORE: BBVA heavily defeated in its hostile takeover bid for Sabadell Bank in Spain
But the move was subject to hostility, particularly from the socialist-led government, the Catalan business community and Sabadell’s board who feared the takeover would have had a negative impact on customers and local businesses.
The merger would have also left Spain with just three large banks, stoking concerns that it would leave the country prone to financial instability.
BBVA’s shares have jumped around 12% since the failed bid, with investors welcoming the end of uncertainty surrounding a deal that would have required heavy capital spending and integration costs.
The spike has bumped BBVA’s market value above €100 billion for the very first time.
Just four Spanish companies – BBVA, Santander, Iberdrola and Inditex – are valued at over €100 billion on the stock market.
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