Last Friday, the markets woke up to a surprise. Banco Sabadell announced shortly after seven in the morning to the National Securities Market Commission (CNMV) its decision to break up the negotiations it was holding with BBVA for its merger. This was the most rumored operation in the market in the last three months after Bankia and CaixaBank announced on September 3 that they were analyzing their merger. But, already before, almost two years ago Sabadell appeared in all pools as the bank with the most ballots to star in a corporate operation.

Well, it seems that, for now, the entity chaired by Josep Oliu has chosen to continue alone and activate its plan B, which consists of selling its assets outside of Spain, such as its British subsidiary TSB, or that of Mexico, in addition to carrying out make new workforce adjustments to pre-retire another 1,700 employees in 2021, who would join the 1,800 outgoing this year, according to the agreement also reached on Friday with the unions.

These initiatives already have the approval of supervisors, who prefer that Sabadell operate only in Spain and forget about international adventures. In 2017 he already sold his franchise in the United States, and now he plans to sell the one he has in the United Kingdom to obtain between 500 million and 600 million euros, figures that do not cover the cost of the investment injected into the country, but that is better than nothing. Before, of course, it must undertake TSB’s reorganization plan, so it does not seem logical that the sale should take place before 2021.

“Hopefully it could be sold sooner, but it is almost impossible, and its price will rise depending on the planned restructuring,” explain financial sources.

In Mexico it will sell its small bank specialized in SMEs, although Sabadell had been in this country for more than a quarter of a century.

The Government, in addition to creating an organization for the defense of the banking client, should found a bank for emptied Spain

The Bank of Spain, like the European Central Bank (ECB), prefer, however, that Sabadell merge and if possible with a bank larger than it, although as repeated by the Governor of the Bank of Spain, Pablo Hernández de Cos, the Financial entities are private companies and their managers are the ones who have to decide. That does not prevent the supervisor from continuing to press for him to star in a corporate operation.

The market, in fact, shares this opinion and, despite the announcement made on Friday by Sabadell to leave BBVA behind, and which the Basque-based bank also announced a little later, it maintains its bet that this is a parenthesis in the negotiations . And they remember the case of Unicaja and Liberbank, entities that after a resounding break in their merger negotiations in May 2019, last October resumed their project, although they have not yet convened their respective boards of directors to approve their fusion. “We are convinced that BBVA and Sabadell will give each other another chance,” an analyst stressed on Friday.

Another analyst also recalled the Unicaja and Liberbank process, but his opinion was more negative. “The two old savings banks continue negotiating, but until they approve it, we do not launch the bells to the flight, we have some doubts that in the end the operation will be carried out. And in the Sabadell and BBVA project, the positions of both banks were very far apart, so it is difficult for them to resume the talks now. A few months later they can, but now we do not believe that they will announce again that they are resuming their corporate project ”, argues this analyst, who like the previous one prefer not to reveal their identity.

These same sources argue that “Sabadell is a much smaller bank than BBVA, but, in the end, it has been the small fish that has stood up to the big one. And that the two may need each other. BBVA must reduce its risk in emerging countries, such as Turkey and Mexico, once it has left the United States, and a good way is to grow in Spain and the merger with Sabadell was a good measure to achieve this objective ”.

We will have to see what happens in the coming weeks in the financial sector, which does not stop giving surprises. The exhaustion of the banking business and the entry of new competitors into a part of the banking business, such as the means of payment or consumer credit, increasingly reduce the profitability of these entities, which also have not yet seen the day the ECB raises interest rates again. For some bankers, like Gonzalo Gortázar, CEO of CaixaBank, this will not happen until 2031.

By that time it is very likely that the banking map is not even the shadow of what it was a few years ago, or even what it is today.

But, meanwhile, the private customer will lose more and more importance in the banks due to the lack of profitability. Some financial experts assure that at this step “an institution would have to be created for those clients of emptied Spain over 50 years of age who need banking services. Who will attend them or give them services in a few years?

The Government plans to approve in 2021, and if it can in the first half of the year, a body for the protection of the banking client, something that was already included in its electoral program. But at this rate, you may also have to create a financial institution for those millions of people who may be excluded from traditional banks, and do not manage to operate only with an application installed on their mobile. Maybe they want some more affection and pampering, why not?

Or maybe the postmen will have to specialize more to be bank managers as well.

Correos already has an agreement with Banco Santander to offer basic financial services throughout Spain. This may be a solution, for all banks to reach bilateral agreements with Correos to offer their services to customers far from the cities. I think that in some countries this initiative even works. It will be necessary to see what they invent to solve this growing problem. Fortunately, rural savings banks continue to exist.


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