The Council of Ministers has made the operation contingent on BBVA maintaining Sabadell as an independent entity for three years, extendable by two, which effectively prevents the merger BBVA sought. The group chaired by Carlos Torres will be able to change Sabadell’s board of directors, but cannot implement joint staff adjustments or branch network changes associated with the operation.
Each entity will have to preserve its legal personality, separate assets, and management autonomy. This individuality includes autonomously making decisions on credit and financing policies, especially for SMEs; on human resources matters, the branch network and its banking services; and social work through their respective foundations. After three years, the effectiveness of this condition will be evaluated, and the Council of Ministers will determine whether its duration is extended for two more years.
The Minister of Economy, Carlos Cuerpo, clarified that this is a “proportionate and balanced condition that is not hindering the process from taking its course,” as a precaution and protection against any legal process. BBVA could appeal the Council of Ministers’ decision to the Supreme Court if it believes it has violated regulations. The Competition Defense Law empowers the government to intervene and set remedies always in favor of a demonstrated and proportional general interest.
The ball is now in BBVA’s court; they will have to evaluate whether to proceed with the transaction. However, they will likely wait to see if, as expected, Sabadell opts to sell its British subsidiary, TSB, for which it has requested firm offers before next weekend.
