BBVA appeals to the Supreme Court against the Spanish government's terms in the Sabadell takeover bid.

MadridBBVA has decided to appeal to the Supreme Court the conditions that the Spanish government has imposed on the hostile takeover bid for Banc Sabadell, as announced by The Spanish and sources at BBVA confirm to ARA. In this way, the financial institution materializes the warning it had issued against Pedro Sánchez's administration when it decided to approve conditions in addition to those of the Competition Authority and linked to the general interest. Specifically, the Council of Ministers agreed to require BBVA to keep Banc Sabadell separate for three years, with the possibility of extending it for another two years, that is, for a total of five years. This means that during this period, BBVA cannot merge with Sabadell (should the takeover bid be successful, it can only acquire it as if it were a subsidiary).

"This [judicial] avenue, of course, always exists," BBVA chairman Carlos Torres stated at the beginning of June, when the Spanish government's decision was not yet known, but it was sensed that it would make a move given the public rejection it has consistently shown towards the takeover bid. Once Pedro Sánchez's government laid its cards on the table, BBVA reaffirmed its belief that it would not rule out any response, including a judicial one: "It is our duty to keep all alternatives and possibilities open within this analysis [of the Spanish government's conditions]," stated the general manager of BBVA in Spain.

Sources at the Bilbao bank assured ARA that the decision to open the judicial route "does not interfere" with the takeover bid process. This week, BBVA reaffirmed its willingness to continue with the operation, despite the obstacles of recent months: from the Spanish government's conditions to Sabadell's sale of its British subsidiary TSB and the distribution of an extraordinary dividend.

BBVA has always expressed discomfort with the idea that the Spanish government could interfere in the takeover bid. When it decided to approve the additional conditions in the takeover bid, the bank already explained that it disagreed with the executive branch's interpretation of the Competition Law, the law that allowed the government to express its opinion. Specifically, the bank interprets the law as only allowing the National Market and Competition Commission (CNMC) to maintain its conditions or soften them, but not tighten them.

The 2007 Competition Law establishes that when a takeover bid reaches Phase 2, as is the case with BBVA's hostile takeover bid for Banc Sabadell, the Ministry of Economy can raise the CNMC's opinion, and therefore the conditions, in the Council of Ministers, and the Council can approve additional conditions. In the case of the Sabadell takeover bid, Pedro Sánchez's administration considered that there was indeed an impact on the public interest, and therefore decided to impose the new conditions. But this decision was unprecedented.

Sources from the Ministry of Economy maintain that the government has acted "at all times" in line with Spanish regulations and point out that the Council of Ministers' decision has the endorsement of the State Attorney's Office and was made "respecting the participation of all the institutions involved and their powers." "In any case, we respect BBVA's decision," indicate the Ministry headed by Carlos Cuerpo.

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