03:25 AM EDT, 07/18/2025 (MT Newswires) -- (Updates with the Spanish economy ministry's response in the sixth and seventh paragraphs.)

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 letter includes a two-month deadline for a response, Bloomberg reported.

The Spanish economy ministry said in a statement emailed 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 and the European Commission did not immediately respond to MT Newswires' requests for comment.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)