Overview

• The European Commission issued a letter of formal notice to Spain on July 17, launching an infringement procedure over its handling of BBVA’s takeover of Banco Sabadell and setting a two-month deadline for response.
• Brussels asserts that Spain’s 2007 Competition Defense Law and 2014 Banking Solvency Law confer unlimited veto authority on the government, undermining ECB prerogatives and restricting freedom of establishment and movement of capital.
• Spain’s Ministry of Economy has defended the contested legislation as longstanding and consistently applied, pledging to submit detailed explanations to Brussels within the allotted timeframe.
• If Madrid fails to address Brussels’s concerns, the Commission may refer the dispute to the Court of Justice of the European Union and seek financial penalties against Spain.
• The infringement procedure follows earlier EU-Pilot consultations initiated in August 2024 and Spain’s June decision to impose a three-year non-merger hold on BBVA and Sabadell after CNMC and ECB approvals.