Barcelona 2020, the year of the outbreak of covid, is remembered at Banco Sabadell as a particularly complicated year. Apart from the impact of the pandemic on society and the economy, it was the year in which the bank plunged into the abyss. From February of that year, its shares collapsed and did not recover either in spring or summer. Already in the autumn, BBVA wanted to acquire it, in what would have been the final point of the entity. The mistrust between domes and Oliu’s refusal to sell too cheaply (the bank of Basque origin was only 250 million euros short of what the Catalan financier was asking for) closed the door to the operation.
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Since then, and with a change of leadership along the way, Sabadell has been improving earnings and share price (it has gone from the meager 1.5 billion it was worth to a share price of more than 6.1 billion). With the help of this comeback, the entity with Valais roots has returned to the market and to the traversas to star in corporate operations.
As various financial sources have told ARA, Banco Sabadell is once again in a position to explore purchases. The one that appears in more crosshairs is that of the Andalusian entity Unicaja, which in recent years has been immersed in a torturous merger with Liberbank. The entity is currently the fifth largest in Spain – far behind Santander, BBVA, CaixaBank and Sabadell – with a capitalization of 2.6 billion euros.
The strong establishment of Unicaja in the south of Spain would give Sabadell more presence in a geographical area where it is not particularly present. But it is not the only reason to make the bet. Sabadell remains a relatively small entity and some analysts point out that, despite its recovery on the stock market, it still has a price that makes it a potential target for takeovers. Acquiring a bank like Unicaja would strengthen it in this regard. And there is a third clear reason: the rate hikes of the European Central Bank in the last year and a half have abruptly increased the profitability of banking in Spain. The more business Sabadell has in Spain, the more money it will make.
Oliu and González-Bueno were in Malaga this summer surveying the operation
The interest in Unicaja from the Catalan entity based in Alicante goes beyond this theoretical fit and the persistent rumors in the sector, to the point that financial sources consulted by this newspaper have explained that both Josep Oliu, president of the bank, such as César González-Bueno, CEO, were in Malaga, where Unicaja is headquartered, before the summer holidays, to survey the operation. The same voices point to one last factor to take into account: Sabadell and Unicaja share several key shareholders, as is the case with the Vanguard, iShares and DFA funds.
Officially, however, the bank is clear: “We are very comfortable with our perimeter, with well-diversified risks and capital allocation geographically; our only focus at the moment is to continue to increase profitability, cover the cost of capital and increase remuneration to shareholders”.
TSB, a bandage that is discarded
It is not the only move that has been speculated about in recent weeks in the bank with operational headquarters in Sant Cugat. Some voices have pointed out that TSB, this time yes, could be the subject of a short-term sale, before even the end of the year. In recent years, the British bank has been an engine of growth and profitability for Sabadell, but rate hikes have changed the landscape: “TSB has gone from being the bank’s tractor to slowing it down a bit; it’s a very simple bank, it almost works like a fixed-income portfolio”, financial sources explain to this newspaper. To this must be added the fact that the macroeconomic situation in the United Kingdom post-Brexit and post-pandemic is clearly worse than the one experienced in Spain.
With the ECB rate hike, the English subsidiary has gone from being an engine of growth for Sabadell to slowing it down a bit, says a financier
Sources familiar with the matter, however, deny this extreme and strongly rule out a short-term sale of TSB. Today, TSB has a return of 11%, higher than the 10.8% for the bank as a whole. In addition, they point out that it is a bank that for now would not find a buyer in the United Kingdom. Other voices point out that there is a single exception, which would be the Nationwide Building Society.
The movements with which Sabadell is being speculated do not end here. The entity has a small subsidiary in Mexico and some voices have pointed out that in this country it could either divest or redouble its bet through a purchase to grow. The profitability of the entity in the North American country is small, around 6.5%. As ARA has been able to learn, at this time, it seems that Sabadell’s bet is to grow in customers by improving the remuneration for the liabilities they offer.
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