The International Monetary Fund (IMF) has made a noteworthy mention in its annual report regarding the acquisition bid of BBVA for Banco Sabadell.

The IMF supports the conditions set by the National Commission on Markets and Competition (CNMC) for authorizing the transaction, albeit with a conditional stance that remains somewhat ambiguous.

Furthermore, the IMF has called for an evaluation of the potential adverse implications of this merger on financial stability.

In contrast, the European Central Bank (ECB), tasked with the analysis of the deal's solvency impact, has expressed no opposition to the transaction.

It is uncommon for an IMF report on a specific country to address private entities and ongoing transactions in such a manner.

Romain Duval, the IMF's mission chief for Spain, underscored in a recent interview that the merger's approval should be strictly evaluated based on two criteria: its effect on competition and financial stability.

Duval referenced the report's explicit call for a thorough evaluation of the possible negative repercussions of the BBVA-Sabadell merger on competition and financial stability.

He noted that concerns regarding competition could be alleviated by corrective measures put forth by the competition authority.

The ECB, alongside the Bank of Spain, has previously indicated its non-objection to the merger in September of the previous year.

In a comprehensive investigation, the CNMC authorized the control acquisition of Banco Sabadell by BBVA, contingent upon certain commitments.

The CNMC determined that the commitments proposed by BBVA were "adequate, sufficient, and proportionate" to address competition-related issues arising from this consolidation in the affected markets.

The Economic Minister, Carlos Cuerpo, has decided to elevate the proposal to the Council of Ministers, where the government will evaluate it based on general interest criteria beyond just competition defense.

The government will ultimately confirm or modify the CNMC's decision regarding the merger.

While the IMF refrains from commenting on the procedural aspects of the transaction, its position, aligning with that of the European Commission, stipulates that decisions should be guided solely by competition and financial stability considerations as established by relevant authorities.

Duval articulated this point, emphasizing that the main criterion for determining the permissibility of a merger should be centered on competition.

He acknowledged that while mergers can lead to efficiency gains, they may simultaneously reduce competition, which poses a disadvantage for consumers.

In addition to addressing the merger, the IMF has voiced criticisms regarding the banking tax in its report on Spain.

The IMF acknowledges that the reform addresses certain flaws of the previous tax regime by eliminating the minimum revenue threshold and allowing deductions for low-profit banks.

However, it noted that the economic justification of the tax remains unclear, and its complex design confuses bank size with excessive profitability.

The IMF recommends that this tax should remain a temporary measure and be repealed at the end of its three-year validity.

The financial sector in Spain is described as being in good health, with banks maintaining robust capital and liquidity buffers, although the core capital ratios are slightly below those of their eurozone counterparts.

The IMF endorses advancing to the second phase of gradually implementing a positive countercyclical capital buffer until it reaches 1% and advises banks to maintain adequate voluntary buffers through prudent dividend distribution.

Furthermore, the IMF reiterates its earlier recommendation for granting greater autonomy to the CNMV in its procedural operations and calls for enhanced resolution powers for the Bank Restructuring Fund (FROB).