The CNMC limits the government's room for maneuver to deactivate BBVA's takeover bid: Sabadell is not "irreplaceable" for SMEs, but there are risks for individuals.

The National Commission on Markets and Competition (CNMC) has had its final say on BBVA's takeover bid for Banco Sabadell . The agency headed by Cani Fernández already approved the transaction at the end of April, but has now outlined the reasons that led to that decision, thereby narrowing the field for the government's intervention in the process to discourage the merger of the two entities. If the Spanish government wants to set conditions, it cannot argue that it jeopardizes the survival of small and medium-sized businesses in Spain because, in the opinion of the CNMC, Banco Sabadell "is not irreplaceable" when it comes to lending to SMEs. Anything related to financial exclusion or the commercial conditions that individual customers will face is another matter, because, in this case, the Competition Authority identified risks that could spur the government to propose measures that would make the takeover bid less attractive.

Yesterday, the regulator published the transaction resolution report, in which it responds sharply to the criticisms and questions that Banco Sabadell has raised throughout the process. The document details the entire analysis of the takeover bid from the moment the transaction was notified to the CNMC on May 31, 2024, until April 29, 2025, when it issued its final verdict. In the 189-page report, the Competition Authority argues forcefully against the approach and allegations presented by Sabadell, telling it that its position in the SME segment, where the Valles-based bank had placed one of the pillars of its defense, is not as relevant as it claims.

Among other things, the CNMC considers it proven that Sabadell "is losing market share" in the segment, even in regions such as Catalonia, Asturias, the Balearic Islands, and the Valencian Community, the most affected by the hypothetical merger. It also considers that medium-sized and small banking operators are increasing their presence and therefore concludes that "the acquired entity cannot be considered a fundamental and irreplaceable operator in these regional markets, nor can it be accepted that medium-sized and small operators pose limited competitive pressure."

The CNMC's rebuke of Banco Sabadell's argument goes further and dismisses the Catalan bank's request to apply structural remedies [including divesting itself of the bank's SME business] instead of behavioral commitments because, according to the Competition Authority, this would be excessive.

Worsening conditions

However, the CNMC report also clarifies the doubts the supervisor identified in the market test regarding the impact that a merger between BBVA and Sabadell could have on the trading conditions of individual customers, and this could be one of the aspects the government could take into account when deciding on the future of the operation.

The Ministry of Economy has decided to submit its analysis of the takeover bid to the Council of Ministers, which has until almost the end of this month to issue a ruling. The date on the calendar is highly likely to be June 24th , according to which it may maintain the commitments already established by the CNMC or tighten them, citing reasons of "public interest." Moncloa, which has been opposed to the operation from day one, is currently gathering arguments to support its attempt to deactivate Torres' offer. In this effort, the CNMC highlights two points that could provide ammunition for the Executive in its eagerness to seek measures to make the takeover bid less attractive: the worsening commercial conditions for individuals and the risk of financial exclusion , especially in rural areas, due to the closure of branches.

On the one hand, the CNMC questioned the "efficiency" of the commitments made by Carlos Torres' group regarding commercial conditions for individuals, especially in the municipalities and provinces of Catalonia and the Valencian Community. "At the municipal level, the transaction does not create a monopoly, but in 48 municipalities it gives rise to a duopoly structure," it stated. "The monopoly and duopoly situation observed in certain postal codes prevents us from ruling out the existence of a risk of worsening commercial conditions for individual customers for certain retail banking products, as the resulting entity will have the capacity and incentives to modify and/or worsen conditions without the risk of losing customers to another entity," the supervisor warned.

On the other hand, the CNMC noted that BBVA's proposed closure of 300 branches could affect access to financial services and that digitalization was not sufficient to mitigate the risk of exclusion, especially for older populations.

After addressing its concerns, the CNMC concluded that the commitments made by BBVA to address them were "adequate, sufficient, and proportionate," and thus granted its final approval.