Sabadell CEO says BBVA offer raises competition concerns
Predicts BBVA could be forced to carve out Sabadell39;s SMEs business
Government reiterates opposition to deal

MADRIDLONDON, May 29 Reuters Spain39;s Sabadell is not planning to try and buy a competitor as part of a potential defence strategy against rival BBVA39;s hostile takeover attempt, Chief Executive Officer Cesar GonzalezBueno told Reuters.

Spain39;s No. 2 lender BBVA this month stunned Spain by making the first hostile takeover attempt in Spanish banking since the 1980s, after Sabadell39;s board rejected an initial bid on the grounds it significantly undervalued the lender.

We are not going to acquire anything. We are not going to sell TSB, GonzalezBueno said, referring to British bank TSB, which Sabadell owns.

Acquiring rivals or selling off parts of a business can be a way for target companies to complicate hostile takeovers.

Under Spanish law, the governing body of a company subject to a hostile offer must remain passive and request shareholder approval before taking any action that can prevent the bid39;s success.

Rejecting BBVA39;s offer which is also opposed by Spain39;s government Sabadell says it will focus on its own growth prospects.

It wrote to retail shareholders  who own half of Spain39;s fourthlargest bank this week as it starts the process of trying to convince its investors the lender is better off alone.

In the letter, Chairman Josep Oliu said the takeover process could run…