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Bond Market News
Spain Warned Over BBVA-Sabadell Merger Restrictions Amid Growing Tensions
July 18, 2025
The European Commission (EC) has issued a legal warning to Spain over its interference in BBVA’s €13bn bid for Banco Sabadell, claiming it breaches EU single market rules on the free movement of capital. The Commission criticized Spain’s conditions i.e., requiring the two banks to operate separately for three years, noting that it was unjustified and possibly infringing on EU law. It called for changes in Spanish law to restrict such interventions to only serious threats to public interest. While Spain defended its long-standing legal framework and commitment to EU principles, the EC argued that Spanish laws give authorities excessive discretionary power, encroaching on the ECB’s jurisdiction. The letter gives Spain two months to respond and comes as BBVA’s offer awaits final approval from the Spanish market regulator. Despite regulatory delays, BBVA is said to remain committed to the bid, citing long-term value for shareholders. Analysts note that expectations for a revised bid may also be in the works. This move by the EU mirrors the recent dispute with Italy over similar national restrictions on UniCredit’s takeover of Commerzbank, highlighting ongoing tensions between Brussels and member states over cross-border banking deals.
BBVA’s USD 5.125% 2033s are trading stable at 96.3, yielding 6.6%. Sabadell’s EUR 6% 2033s are also trading steady at 107.2, yielding 3.3%.
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