Background on Key Players and Relevant Context
The European Commission (EC) has issued formal warnings to the governments of Italy and Spain due to conditions they have imposed to potentially hinder or delay internal bank mergers. The EC’s focus has been on operations such as BBVA’s takeover bid for Banco Sabadell and UniCredit’s offer on Banco BPM.
Spain: BBVA and Banco Sabadell Merger
In June, the Spanish government, led by Pedro Sánchez, tightened conditions for the BBVA-Banco Sabadell merger. The Council of Ministers agreed to authorize the operation, provided that “both entities maintain separate legal identities and distinct assets for at least three years.”
The Spanish government aims to prevent mass layoffs for at least this duration and ensure adequate financing for consumers and businesses. However, the EC responded by opening an infringement procedure on July 16, sending a letter of warning to Spain.
According to the EC, certain provisions in Spanish banking legislation grant the government unlimited power to intervene in bank mergers and acquisitions, which violates the exclusive competencies of the European Central Bank and national supervisors.
Italy: UniCredit’s Offer on Banco BPM and Golden Power
The Italian government activated its Golden Power to impose conditions on UniCredit’s takeover bid for Banco BPM, including the requirement to exit Russia. The EC also sent a letter to Italy last week, stating that conditions imposed on UniCredit might breach EU legislation.
The EC claims that Italy has violated EU rules and given the government 20 working days to respond to its objections, as per the seen letter by Reuters.
Should Italy fail to convince EU authorities that its use of Golden Power is justified, the EC may adopt a decision ordering Italy to revoke conditions “without delay,” as stated in the document.
The temporary suspension period imposed by Italy for UniCredit to announce whether it will maintain its offer for Banco BPM ends on July 23.
Pressure on Other European Countries
Although Germany has not received a formal warning yet, it has also shown resistance. The EC’s warnings primarily target Italy and Spain, but the implications extend to other European countries as well.
Key Questions and Answers
- What is the European Commission’s concern? The EC is worried that certain conditions imposed by governments on bank mergers violate its exclusive competencies regarding banking supervision and may breach EU legislation.
- Which mergers are under scrutiny? The EC has focused on the BBVA-Banco Sabadell merger in Spain and UniCredit’s offer on Banco BPM in Italy.
- What actions has the EC taken? The EC has opened infringement procedures against Spain and Italy, sending letters of warning and giving them time limits to respond to objections.
- What could happen if governments fail to address EC concerns? The EC may order governments to revoke conditions “without delay” if they cannot justify their use of Golden Power.
