Banco de Sabadell

Banco de Sabadell is a Spanish banking group founded in 1881, listed in Madrid and included in the IBEX 35, with legal domicile in Alicante and main operating centers in Catalonia; it focuses on retail and commercial banking, with a strong SME franchise in Spain and a UK presence through TSB Bank, acquired in 2015 as a ring-fenced retail subsidiary. The group simplified its scope in recent years by disposing of non-core assets, including the sale of Sabadell United Bank in the U.S. (2017) and its asset management arm to Amundi (2020), while maintaining bancassurance partnerships (notably with Zurich) and standard product lines such as current accounts, mortgages, SME lending, cards, and payment services. TSB’s 2018 IT migration failure resulted in remediation costs and a regulatory fine in 2022, but the unit has since stabilized operations and contributes to group earnings. Performance improved with higher interest rates: in 2023 the group reported approximately €1.33 billion in attributable net profit, a double-digit return on tangible equity, a fully-loaded CET1 ratio in the low‑13% area, and a low single‑digit non‑performing loan ratio, alongside ongoing cost reductions from branch and workforce adjustments in Spain; cash dividends and share buybacks resumed within a stated payout framework, subject to regulatory and capital constraints. The bank is supervised by the ECB under the Single Supervisory Mechanism, is compliant with MREL requirements, and has ample liquidity buffers; it has also been subject to Spain’s temporary bank levy, which the sector has challenged in court. Key sensitivities include deposit repricing and competition as rates normalize, SME credit cycle dynamics in Spain, margin pressure and competition in UK mortgages via TSB, and conduct or operational risks. Strategic uncertainty increased in 2024 after BBVA announced a takeover bid that Sabadell’s board opposed; the proposal is subject to shareholder decision and regulatory review, and its outcome could alter the group’s standalone plan and capital deployment.