BBVA’s pursuit of Banco Sabadell is facing new delays as Spain’s competition authority (CNMC) launched an in-depth review of the merger proposal on Tuesday. The regulator’s “phase 2” investigation, which extends the review period by at least three months, adds uncertainty to BBVA’s plans, especially given its extensive exposure to Latin America, where economic factors could influence the deal’s success.
The impact of BBVA’s operations in Latin America, particularly in Mexico, is central to the unfolding situation. Mexico has long been a major profit center for BBVA, contributing over half of its global earnings. However, recent political changes in the U.S. are prompting fears that Mexico’s economy could face challenges under Donald Trump’s administration, which has signaled a protectionist stance. Such uncertainties have weighed on BBVA’s stock, which has dropped by about 7% following the election and has lost 18% since the Sabadell bid was first announced.
The falling stock value has reduced BBVA’s offer for Sabadell from its initial €12.28 billion in April to approximately €9.83 billion, raising questions about the merger’s appeal for Sabadell shareholders. Some analysts worry that continued economic and political shifts in Latin America, particularly in Mexico, could make BBVA’s position even more volatile and affect the terms or success of the merger.
BBVA has affirmed its commitment to working with Spanish regulators to secure an agreement on required remedies. However, its leadership has expressed willingness to walk away if conditions become too restrictive. While BBVA aims to expand its Spanish market presence, its strong ties to Latin America present both challenges and potential growth opportunities for shareholders focused on long-term gains in the region.
