(Bloomberg) -- BBVA Chief Executive Officer Onur Genc said he’s prepared to abandon the pursuit of rival Banco Sabadell if stringent regulatory conditions were to spoil the deal’s appeal.
“We will not hesitate one second to walk away” from the Sabadell bid if the conditions imposed by Spanish regulator CNMC make it worthless, Genc said at a conference in Madrid on Wednesday. BBVA will now work “constructively” with the agency “to finalize the list of remedies,” he said.
Genc added that he expects CNMC to approve the deal in “a few months.”
The comments come a day after CNMC deepened its assessment of the proposed transaction, effectively extending the process by months. The extension raises the specter of conditions including asset sales as part of the regulator’s approval, and hurts BBVA’s chances of success, analysts have said.
BBVA, whose formal name is Banco Bilbao Vizcaya Argentaria SA, in May launched a hostile attempt to buy Sabadell, hoping to create a Spanish banking behemoth and rebalance its income away from emerging markets. The deal needs approval from various domestic and international regulators before it can be presented to Sabadell’s shareholders, with CNMC’s decision being one of the most important.
Sabadell’s management has rejected the offer as too low. BBVA also faces push-back from the Spanish government, which has raised concerns about market concentration but has limited powers to block a deal. What the government can do is block a merger.
BBVA expects CNMC to approve its Sabadell offer without “structural remedies,” Chief Financial Officer Maria Luisa Gomez-Bravo said last month on Bloomberg TV.
But Alantra analyst Francisco Riquel said in a note on Tuesday he expected the agency to impose “hard remedies,” which could include asset disposals.
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