Shortly after announcing the completion of the negotiations with BBVA, Banco Sabadell has issued a statement detailing its new plans, which include continuing alone. The entity has announced that it will develop a new business plan that will prioritize the domestic market and which includes the sale of the British subsidiary TSB, once its restructuring has begun, and of the Mexican business.
The new plan will aim to increase efficiency in the use of the group’s capital and resources, “thus increasing profitability and creating value for shareholders,” according to a statement issued by the Catalan entity. Although it will not be presented until the first quarter of next year, the entity has already advanced that it will expand the efficiency and transformation program in retail banking in Spain, without reducing its capital ratios.
The investment bank Goldman Sachs was hired in July precisely to seek options for the Catalan bank, among which a plan B stood out in case it chose to remain alone.
The plan currently underway involves the departure of 1,800 workers, whose conditions are being negotiated with the unions. The bank thus plans to save 115 million a year. Labor negotiations were temporarily postponed on November 17, after the announcement that Banco Sabadell and BBVA were analyzing a possible merger, and new meetings were called yesterday between the representatives of both parties.
Likewise, the entity “will analyze with its advisers strategic alternatives for creating value” regarding assets abroad, including the penalized British division TSB. In fact, according to financial sources, Sabadell gave Goldman the mandate to advise on its plan B, and among the options is the sale of the subsidiary, although the forecast is its sale in 2021, once the reorganization plan has been executed, although the Hiring of the investment bank took place in July. The problem is that analysts put the current value of TSB at zero, or even negative
It is the first time that Sabadell has publicly acknowledged that it is evaluating the possibility of selling the franchise, bought in 2015 from Lloyds for about 1.7 billion pounds, equivalent to about 2.34 billion euros at the then exchange rate. The British subsidiary announced a few weeks ago that it plans to close another 164 branches in the United Kingdom this next 2021 to gain profitability, which will affect about 900 jobs. The division has weighed down on the group in recent years, especially due to IT problems arising from integrating technology platforms. In the last quarter it lost 84 million.
Sabadell is also willing to sell its bank in Mexico, a digital platform that operates practically the same as ING did until recently in Spain, attracting customers by paying high interest rates for deposits.
The firm chaired by Josep Oliu also has a plan in place to close more offices in Spain. This year it has already accelerated the closing of branches to dispense with 235 branches. But this number will be added as many.
The bank’s CET1 capital ratio stands at 12.9%, according to the entity, the second highest of its comparable group, with stable prospects throughout 2021, according to analysts.
Its delinquency rate is 3.81%, a percentage below the average, with limited exposure to the credit portfolios most sensitive to Covid, analysts explain (8% of the total of its current loans).