Spain's BBVA Faces Regulatory Hurdles in Sabadell Takeover Bid

Spain's BBVA has encountered significant regulatory challenges in its proposed integration with Sabadell, as the Spanish government imposes a three-year wait period to ensure that the entities maintain separate operations. This setback could hinder BBVA's expansion efforts.

The Spanish Economy Minister, Carlos Cuerpo, stated that the conditions aim to safeguard employment and protect domestic industries. Despite this, Spain's antitrust authorities have approved the merger, although the government is concerned about potential job cuts that may result.

BBVA now faces a critical decision: proceed with the government's terms or explore alternative strategies, such as abandoning the deal or seeking legal recourse. Analysts at RBC have recommended a shareholder buyback, citing doubts about achieving sufficient synergies.

(With inputs from agencies.)