05:41 AM EDT, 07/18/2025 (MT Newswires) -- (Updates to include the official European Commission statement and BBVA's response.)

The European Union has issued a legal warning to the government of Spain for hindering Banco Bilbao Vizcaya Argentaria's ( BBVA ) planned acquisition of rival Banco Sabadell, Bloomberg News reported Thursday, citing a letter it has seen.

The government approved the takeover with a condition that prevents a full merger for at least three years, news outlets reported previously.

"It is highly questionable whether the requirement that the two banks maintain separate legal personality and management for a period of three years addresses legitimate public order or security objectives that are not already sufficiently protected by other EU legislative instruments," the European Commission reportedly said in the letter sent to the Spanish government.

An EU executive said that the national law should be changed such that the government can stand in the way of bank deals "only in justified cases where there is a threat serious enough to the specific and fundamental interest of society," according to the report.

The EU economy benefits from consolidations in the banking sector, while bank mergers also make sure that capital is "allocated efficiently" across the bloc, the European Commission said in a statement posted on its website. The letter includes a two-month deadline for a response, the commission said.

The Spanish economy ministry said in a statement e-mailed to MT Newswires that the legislation referred to by the European Commission "has been in force for several years and has been applied on several occasions since then," according to a translation.

"Spain will communicate its response within two months, as permitted by the procedure," the statement said. "The government will continue to cooperate constructively with the European institutions to explain and clarify any legal or technical differences."

BBVA declined to comment to MT Newswires' request for comment.

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