EU Issues Infringement Notice to Spain Over BBVA-Sabadell Merger Block

The European Commission has formally challenged the Spanish government over its intervention in the €13 billion BBVA takeover of rival Sabadell, warning that Spain's conditions on the merger may breach EU banking and competition laws. Spain required the two banks to maintain separate legal personalities, assets, and management autonomy for at least three years, despite the deal being cleared by both the European Central Bank and Spain's competition authority. The Commission argues that Spain's broad powers to interfere in banking mergers overlap with the exclusive competences of the ECB and national supervisors, and unjustifiably restrict the free movement of capital and establishment rights under EU law. Spain has two months to respond to the infringement notice, or the Commission may escalate the case to the Court of Justice of the European Union. The dispute reflects broader tensions between political efforts to protect domestic banks and jobs, and EU calls for banking consolidation to strengthen the financial sector and advance the banking union. BBVA intends to proceed with the bid despite the government's imposed conditions and the ongoing EU legal challenge.