BBVA’s acquisition of Sabadell faces a significant delay, as the Spanish government has mandated atleast three-year wait period before the two entities can integrate their operations.

This condition is part of the government’s approval of BBVA’s hostile bid for the smaller rival, potentially impacting BBVA’s expansion plans, reported Reuters.

The Spanish government, aiming to protect jobs and maintain financial stability, has stipulated that BBVA and Sabadell must remain separate legal entities with independent management for at least three years.

Spanish Economy Minister Carlos Cuerpo stated, “The government has authorised the BBVA and Sabadell deal on the condition that, for the next three years, they remain separate legal entities and maintain separate assets, as well as preserve autonomy in the management of their activities.”

Cuerpo further emphasised the government’s focus on safeguarding workers, companies, and financial customers.

After the initial three-year period, the government may extend these conditions for an additional two years.

Sabadell has expressed its intention to remain independent, with the company spokesperson noting BBVA must assess the impact of these conditions on expected synergies.

Spain’s antitrust watchdog has cleared the deal, now reportedly valued at €14bn ($16.23bn), focusing on competition aspects.

However, the Spanish government has imposed conditions due to concerns over potential job losses, despite the European Union urging Madrid to respect the antitrust decision.

Last month, European Commission warned the Spanish government against imposing undue obstacles to BBVA’s hostile takeover bid for Banco Sabadell, stating that Madrid does not have the authority to block the deal on discretionary grounds.  

Cuerpo clarified that the conditions do not block the transaction, leaving the decision to proceed with BBVA and Sabadell shareholders.

Under Spanish law, while the government cannot prevent BBVA from purchasing Sabadell’s shares, it holds the authority to approve or deny the merger at a later stage.

The new entity will be eligible to seek merger approval once the imposed conditions are fulfilled.