Banc Sabadell plans to go it alone and develop a new business plan that prioritises the domestic market, after breaking off negotiations with BBVA for a possible merger.
The two financial institutions, both in Spain's top five, have called off their negotiation, as no agreement had been reached on the exchange equation for the shares of the two banks. Now, Banc Sabadell plans to continue alone and has announced that during the first quarter of 2021 it will present a new business plan, with the focus on the domestic market.
.@BancSabadell desenvoluparà el seu nou pla prioritzant el mercat domèstic
— Sabadell Premsa (@sabadellpremsa) November 27, 2020
+ El pla es presentarà durant el primer trimestre del 2021
+ El banc disposa de palanques i recorregut per augmentar rendibilitat i generar valor de forma orgànicahttps://t.co/rf2G2OcaWo #SerOnSiguis pic.twitter.com/iU9GahqvQz
"BancSabadell will develop a new plan prioritizing the domestic market. The plan will be presented during the first quarter of 2021. The bank has leverage mechanisms and a route to increase profitability and generate value organically"— Sabadell media office
Targets of domestic focus
The bank's new approach aims to "increase efficiency in the use of the group's capital and resources, thus increasing profitability and creating value for shareholders," according to a press release.
Sabadell states that this new plan will include, among other measures, the expansion of its efficiency and transformation programme for the Spanish retail market, while analyzing with its advisers "strategic alternatives for value creation with respect to the group's international assets, including its UK subsidiary TSB".
TSB is a British franchise that Banco Sabadell acquired in 2015 from Lloyds for about 1.7 billion pounds (2.3 billion euros). This is the first time that Banco Sabadell has made public the possibility of divesting the subsidiary.
In fact, according to Reuters, Banco Sabadell has already commissioned Goldman Sachs to sell the TSB and the process is underway. For its part, the bank originally from the Vallès county in metropolitan Barcelona has avoided comment and refers to it press notice detailing that it will analyze "strategic alternatives".
Shares fall
With the announcement of the calling off of talks between the two banks, Banco Sabadell today experienced a 12% drop in the value of its shares, to 0.35 euros.
On the other hand, BBVA saw its upward stock trend strengthened, and the value of its shares rose today to 3.80 euros, a rise of 2.5%.
BBVA headquarters in Madrid. / EP
Merger called off
The Sabadell-BBVA merger would have generated a financial group with more than 950 billion euros in assets and a size in Spain very similar to that of the absorption of Bankia by CaixaBank, likely to go ahead in 2021. In fact, the merger would have positioned the new bank as the second largest bank in Spain.
The merger talks between the two entities were made public on November 16th and in recent days several leaked reports claimed that an agreement was close.