Brussels escalates infringement case against Spain over laws used to block BBVA-Sabadell takeover

The European Commission escalated its legal dispute with Spain on Thursday, sending an additional letter of formal notice over national legislation used to obstruct BBVA's hostile takeover bid for Banco Sabadell. The move widens an infringement procedure first opened in July 2025.

The core of the dispute

Brussels argues that Spanish laws grant the government unlimited powers to intervene in bank mergers and acquisitions, violating the EU's single supervisory mechanism, capital requirements directives, and the fundamental freedoms of establishment and capital movement enshrined in the Treaty on the Functioning of the European Union. The Commission maintains that only the European Central Bank and national competition authorities should rule on such operations.

The Commission considers that the Spanish measures in question are incompatible with the new CRD VI framework governing acquisitions, mergers, divisions and other structural changes affecting credit institutions, which further reinforces the concerns already set out in the 2025 letter of formal notice.

A new directive adds weight

Since the first letter was sent on 17 July 2025, the Capital Requirements Directive VI (CRD VI) has entered into force. Its transposition deadline expired on 10 January 2026, and Spain has not yet incorporated it into national law. The directive stipulates that the power to authorise or block bank mergers should rest with supervisors, not governments. The Commission has now updated its legal assessment to include CRD VI among the infringements identified.

The BBVA-Sabadell operation

BBVA's bid for Sabadell, launched on 9 May 2024, ultimately failed after the Basque bank secured less than 26% of the Catalan lender's share capital. The Spanish government, led by Prime Minister Pedro Sánchez, had imposed additional conditions on the deal by elevating the competition authority's decision to the Council of Ministers. Brussels received a complaint from a Spanish citizen just two days after the bid was announced, alerting it to potential conflicts between Spanish banking law and EU rules.

What happens next

Spain now has two months to respond and remedy the deficiencies identified by the Commission. If no satisfactory response is received, Brussels may issue a reasoned opinion, the next stage in the infringement procedure, which can ultimately lead to a referral to the Court of Justice of the European Union.

Consolidation in the banking sector benefits the EU economy as a whole and is essential for the achievement of the Banking Union. These mergers also ensure efficient allocation of capital across the Union and access for citizens and businesses to financial products at competitive prices.

Political dimension

The government of Pedro Sánchez had shown strong political interest in blocking the merger, with sources citing a desire to appease Catalan separatist coalition partners. Economy Minister Carlos Cuerpo, now first vice-president, holds the discretionary veto power over bank mergers that Brussels wants eliminated. Community sources indicate that despite contact between Spanish and European authorities since July 2025, Spain has yet to submit a proposal to amend its legislation.

The two specific laws under scrutiny are the twelfth additional provision of Law 10/2014 on the regulation, supervision and solvency of credit institutions, and a royal decree-law from February 2015 that develops the earlier norm and assigns the Economy Minister the power to authorise mergers, spin-offs and asset transfers in the banking sector.