Spanish stock market regulator CNMV has admitted BBVA's application to authorise its €12.28 billion hostile takeover bid for rival lender Sabadell, putting the controversial deal firmly on the path towards regulatory approval or rejection.

"The admission for processing of the application does not imply any type of pronouncement on the decision concerning the authorisation of the takeover bid," CNMV stated, emphasising the move was simply procedural.

The application, which Sabadell firmly rejected last month, must still secure green lights from the European Central Bank and Spain's antitrust watchdog CNMC before it can proceed. Notably, the Spanish government has voiced opposition to the tie-up.

If successful, BBVA's all-share bid would create Spain's largest bank by domestic assets, leapfrogging current leader CaixaBank. The combined entity would cap the latest wave of consolidation in the country's banking sector.

BBVA, which failed in a previous attempt to acquire Sabadell in 2020, now plans to convince regulators of the merits of absorbing its smaller rival. The bank expects the full regulatory process and tender offer period to last up to eight months.

Ahead of that period, BBVA has called an extraordinary shareholder meeting for 5 July to approve a share issue funding the bid. Chair Carlos Torres urged investors to participate, while analysts at KBW recommended approving the capital increase, citing the benefit of reduced emerging markets exposure.

Under Spanish law, the government cannot directly block the deal but wields final authorisation power. BBVA believes it could complete the transaction by mid-2025 if approved

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