Brussels expands infringement case against Spain over government veto power in bank mergers

The European Commission escalated its year-long dispute with Spain on Thursday, sending an additional letter of formal notice that expands the infringement procedure over Madrid's intervention in the failed BBVA takeover of Banco Sabadell. The move adds the delayed transposition of the Capital Requirements Directive (CRD VI) to the list of alleged breaches, which already included the Single Supervisory Mechanism Regulation and Treaty provisions on freedom of establishment and free movement of capital.

The core of the dispute

The case dates back to July 2025, when Brussels first challenged Spain's use of national legislation to impose extra conditions on the BBVA-Sabadell deal. The Spanish government, led by Economy Minister Carlos Cuerpo, ultimately vetoed the merger for three years, extendable by two, after the competition authority CNMC referred the case to the Council of Ministers. The Commission argues that only the European Central Bank and national competition authorities should have a say in 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 expressed in the 2025 letter of formal notice.

The new infringement

Brussels now notes that Spain missed the 10 January 2026 deadline to transpose CRD VI into national law. The directive, linked to Basel IV, strengthens the role of the Bank of Spain and the ECB in merger approvals while limiting national executives' discretion. Spain has not yet submitted a proposal to amend its legislation, according to EU sources.

The political dimension

Tensions within the Commission itself have surfaced. Competition Commissioner Teresa Ribera, a Spanish socialist, has reportedly been pressing against pursuing the case, but Financial Services Commissioner Maria Luís Albuquerque has pushed forward. The Spanish Economy Ministry says it is working on transposing CRD VI to remove political veto power from banking supervision law, but insists this will be without prejudice to the CNMC's role, suggesting it intends to retain some leverage through competition law.

The Government notes that it is working intensively on the transposition of the new CRD VI directive, to adapt domestic legislation and reflect the exclusive competence of the ECB and the Bank of Spain in matters of prudential supervision of bank mergers.

What comes next

Spain has two months to respond and remedy the deficiencies. If Brussels is unsatisfied, it can issue a reasoned opinion, the final step before referring the case to the Court of Justice of the European Union, which could impose financial sanctions. The BBVA-Sabadell deal ultimately collapsed after the conditions imposed by Madrid meant BBVA secured only just over 25% of the Catalan bank's shareholders.

Separate EU legal actions

In a separate set of decisions on the same day, the Commission referred both Spain and Poland to the EU Court of Justice for failing to fully transpose the Emissions Trading System directive by the 31 December 2023 deadline. Spain has not communicated the transposition of the general CO2 market reform, which reduces free pollution permits and includes maritime transport for the first time. Both countries also lag on revised aviation rules. Brussels also issued a reasoned opinion to Spain over its failure to implement new rules on instant payments, which were applicable in the eurozone from 2025 and aim to make instant euro payments affordable, secure and seamless across the EU.