Background on the Situation
In response to criticism from the European Union (EU) over attempts to hinder BBVA’s hostile takeover bid for rival Sabadell, the Spanish government plans to transfer some bank supervision competencies to the European Central Bank (ECB) and the Spanish central bank, as reported recently.
Government’s Response
A spokesperson from the Ministry of Economy stated that national regulations will be adjusted to ensure exclusive supervisory prudential competence for the ECB and the Spanish central bank. No further details were provided.
The spokesperson mentioned that the transfer will occur once Spain adopts the new EU directive on capital requirements, which must be implemented before January 2026.
EU’s Criticism and Legal Proceedings
In July, the European Commission formally challenged Madrid’s attempts to obstruct BBVA’s €16 billion hostile takeover of Sabadell, leading to an infringement procedure. The offer eventually failed.
The Commission deemed Madrid’s broad discretionary powers as unjustified restrictions on the free movement of capital.
Madrid maintains that its national regulations are fully aligned with EU regulations, and the spokesperson asserted that ensuring the ECB and Spanish central bank’s competencies would not prevent state entities, such as Spain’s competition regulator, from fulfilling their duties.
Next Steps
The EU Commission now needs to decide if Spain’s response in the infringement procedure is satisfactory. If not, the case could be referred to Madrid and ultimately to the EU’s highest court.
A Commission spokesperson confirmed receiving Spain’s response and stated that the EU will analyze it before determining further actions.
Context and Impact
Under Spanish law, the government couldn’t prevent BBVA from acquiring Sabadell’s shares but had the final say in a subsequent phase regarding whether the merger proceeded. Madrid claimed it needed to safeguard jobs and competition.
Ultimately, Sabadell shareholders only offered 25.47% of voting rights, resulting in BBVA’s offer failure earlier this month.
Key Questions and Answers
- What is the main issue? The European Union criticized Spain for attempting to obstruct BBVA’s takeover of Sabadell, leading to a planned transfer of bank supervision powers.
- Who is involved? The Spanish government, BBVA (a Spanish bank), Sabadell (another Spanish bank), the European Central Bank, and the European Union Commission.
- What is the planned transfer? Some bank supervision competencies from the Spanish government to the ECB and the Spanish central bank.
- Why is this transfer happening? In response to EU criticism over attempts to hinder BBVA’s takeover of Sabadell.
- What happens next? The EU Commission will evaluate Spain’s response to the infringement procedure, potentially referring the case to the EU’s highest court if unsatisfied.
