The government could take months to decide on the takeover bid for Banc Sabadell.

BarcelonaThe central government could take "a few months" to decide whether to impose conditions on BBVA if it wants to continue with its offer to purchase Banco Sabadell, once the National Commission of Markets and Competition (CNMC) approves the transaction, sources close to the process told EFE.

In theory, the competition law stipulates that the Minister of Economy can submit the final opinion of the Competition Authority to the Council of Ministers for its opinion (this is what is known as phase 3). According to the law, the Council of Ministers would have only one month to confirm the CNMC's conclusions, establish new criteria, or even have the power to water down the conditions imposed by the Competition Authority. A precedent for this phase 3 can be found in 2012 in the merger between Antena 3 and La Sexta.

But the management of this timeframe and its compliance depend exclusively on the central government. Therefore, the same sources explain to EFE that Pedro Sánchez's administration may take "a few months," as the Competition Authority has needed, to establish a position on the transaction that could mean the end of Banc Sabadell.

In a query for this newspaper, sources from the Ministry of Economy have given no clue as to whether they would be inclined to prolong the procedure and have insisted that once they know the Competition Authority's ruling, they will decide how to proceed. Publicly, the Minister of Economy, Carlos Cuerpo, called for "caution" while the CNMC continues its work. "We will see what report comes out, what the results are, and, based on that, the government will act accordingly," Cuerpo said less than a month ago.

The CNMC (National Commission for the Competition Authority) is about to conclude its analysis of the impact on competition of a hypothetical merger between BBVA and Banc Sabadell, and the institution chaired by Cani Fernández is expected to approve the transaction "in the coming weeks" with a series of commitments from the Bilbao-based bank. The methodology used is the same as that used in the transaction between CaixaBank and Bankia, which Sabadell criticizes because, it says, it does not reflect the reality of a merger that includes a very important bank in the SME sector.

Given the opposition shown by the Spanish Central Bank (Corporación Nacional de Economía) and the entire Pedro Sánchez government to the transaction, it is assumed that the Minister of Economy will decide to raise the matter to the Council of Ministers. He will have a period of fifteen days to do so, as stipulated by law. From that moment on, the timetable could be upended if the Cabinet decides that one month is not enough to confirm the decision issued by the CNMC or agree to authorize the merger with new conditions.

The 2007 Competition Law makes it clear that these conditions must be duly justified by reasons of general interest other than competition, such as national security, environmental protection, or the promotion of innovation, for example.

Fight over the timetable

BBVA Chairman Carlos Torres sees little room for the executive branch to impose additional commitments. This is in contrast to Sabadell CEO César González-Bueno, who is confident that conditions exist to guarantee competition. He believes that if the CNMC doesn't do it, the central government should. "It's a social obligation, not a political one," argued Sabadell's top executive recently, who believes it is necessary to establish "social welfare" commitments, such as territorial balance, so that all autonomous communities have access to credit.

But this isn't the only clash between the two entities. Sabadell is interested in extending the takeover bid process, while BBVA would like to shorten it. Financial sources indicate that the funds, which are decisive in the vote that must decide whether BBVA will buy the Valles-based entity, dislike the discussion dragging on, nor do they like the media noise or the explicit opposition of the Spanish government.

Until now, it was expected that the issue could be definitively resolved by mid-July. In fact, BBVA CEO Onur Genç stated this Tuesday that they are confident that the National Securities Market Commission (CNMV) will open the acceptance period, that is, when Sabadell shareholders will be able to vote on whether or not to sell their shares, at the end of June. If the Spanish government extends the discussions for a few months, the operation could be launched in the last quarter of the year.