BBVA's takeover bid for Sabadell (re)opens the Pandora's box of public interest

MadridLuis de Guindos, currently Vice President of the European Central Bank (ECB), was the first Minister of Economy who, with the 2007 Competition Law in hand, decided in 2012 to submit a takeover bid to the Council of Ministers, citing reasons of public interest. This involved the acquisition of La Sexta by Antena 3. He was the only minister of his rank who could claim that honor until Tuesday afternoon, when the current Minister of Economy, Carlos Cuerpo, decided to do the same in the case of BBVA's hostile takeover bid for Banc Sabadell.

Almost fifteen years later, then, the Pandora's box of public interest has been reopened, the key element that justifies the intervention of the Spanish government in such a process and allows it to modify the conditions set by the National Market and Competition Commission (CNMC) regarding the transaction. In fact, the ministerial order authorizing the takeover bid, to which ARA has had access, links the decision to "reasons of general interest other than those of competition protection, related to the potential impact on ensuring adequate maintenance of sectoral regulatory objectives; worker protection; and the promotion of research and technological development."

In 2012, Mariano Rajoy's government opted to water down the commitments. What Pedro Sánchez's administration will ultimately do is still unknown, although from within the Spanish government, specifically the Ministry of Labor, they have already made it clear that the conditions must be tightened.

The Ministry of Labor's five conditions

This Wednesday morning, Carlos Cuerpo called for "calm" in the face of the process now underway—the Spanish government has thirty calendar days from this Tuesday to decide whether to impose further commitments. "We will conduct a very detailed and granular analysis to make the best decision with all the necessary guarantees," Cuerpo stated in statements to the media. The minister called for "prudence" given that it affects two listed companies.

"Each institution has specific powers. The ECB and the Bank of Spain assessed the operation from the perspective of financial stability [...] The CNMC has intervened due to the impact of excessive [banking] concentration and the impact on customers, companies, and families [...] The regulations stipulate that the government can go beyond the government. The ...

On the other hand, the portfolio managed by Yolanda Díaz (Sumar) has been much more precise. In fact, the Ministry of Labor has already set five conditions: maintaining "in full" the jobs at both entities, including "all" of the offices; not changing the conditions for accessing credit for SMEs and the self-employed, nor worsening the financial conditions (for example, by increasing commissions or providing worse services); and, finally, "banking" and opening the door to vetoing the merger (the next important step if the takeover bid is successful).

Sources consulted by ARA with knowledge of the process indicate that some of the conditions put forward by Treball would clash with the Competition Authority's ruling. In this sense, the European Commission has already put the Spanish government under scrutiny. "We hope it will comply with the decisions of the competent authorities [on the takeover bid]," warned community sources this Tuesday afternoon, while recalling that the operation has received the approval of not only the European Central Bank, but also the competition authorities. "We are not aware of any reason that could justify the rejection or blocking of the operation," they insisted. The same sources. This Wednesday, the body downplayed Brussels' assessment and dampened the possibility of a train wreck.

For some time now, but especially amid the push for strategic autonomy, the European Commission has championed the need for larger banks. However, within governments, the idea doesn't generate enthusiasm: the Portuguese government, for example, has just spoken out against the possibility of CaixaBank buying Novo Banco.

Crossed interests in banking

Meanwhile, in the Spanish financial sector, conflicting interests are becoming evident. CaixaBank, in particular, has once again championed consolidation: "There is room [for further consolidation] in many countries. In Spain, the degree of consolidation is medium," said the bank's CEO, Gonzalo Gortázar, during a conference organized by Five Days in Madrid.

For its part, Banco Sabadell insists on its solo venture. All European treaties "recognize safeguarding the general interest" in the banking sector. In fact, González-Bueno has questioned the fact that the Commission has thoroughly studied the operation: "I don't know if it has been studied enough to reach that conclusion," he said regarding the CC's assessment. "We are not going to be able to reach a consensus on economic operators after Brussels' opinion," stated the general secretary of CCOO, Unai Sordo.

Political pressure?

However, the Spanish government will rely on the responses to the public consultation on the takeover bid, but also on the reports prepared by up to five different ministries, including Labor, to determine whether to impose additional conditions to those of the CNMC or accept its final opinion. Regarding the pressure the Spanish government may face when it comes to conditioning the operation, particularly from the ERC (Republic of Catalonia) and Junts (Junts), the investiture partners, Cuerpo denied that the regional government has conditioned its support for the Spanish government in exchange for its "intervention" in the operation. Meanwhile, the President of the Generalitat (Catalan Government), Salvador Illa, defended the Ministry of Economy's decision. "It is consistent," he said.