It is times to take cover from the Covid and look for a rudder shift. Banco Sabadell managed to close 2020 with a positive profit, but barely two million euros (-99.7% year-on-year) due to provisions against the pandemic, the restructuring processes in Spain and the United Kingdom and the sale of portfolios of toxic assets. A complicated year for the entity, which is trying to lay the foundations to get out of its particular crisis.
«We closed a year with an excellent commercial performance and the increase of all business margins. With the effort in sanitation and the execution of the efficiency plan in Spain and the United Kingdom, we are laying the foundations for our next strategic plan that will be presented next May », he indicates Jaime Guardiola, until now CEO. Said plan, which was scheduled to be presented in the first quarter, is extended for two more months and will be led by the new CEO, César González-Bueno.
In the year as a whole, Sabadell, known as “the corporate bank”, provisioned 2,275 million euros. Such a large figure (more than double that of the previous year) whose increase is due to the Covid environment, with a direct impact of 650 million, another 380 million due to higher provisions for the sale of problem assets and another 115 million for reclassifying certain loans to a higher doubtfulness range, “following conservative criteria”, as explained by the entity in its financial report.
Thus, the income from the banking business (interest margin + net commissions) reached the 4.749 million, 6.2% less, although in the fourth quarter they managed to rebound by 3.1% thanks to the growth of both concepts. Likewise, the bank takes advantage of its low NPL ratio, which stood at 3.6% at the end of the year, below the industry average, while the ratio of net problem assets over total assets fell to 1.4%. Its coverage ratio, on the other hand, remains at 52.6%.
The benefit of just two million euros that the bank registered last year is understood to be compared to the 7.7% increase in costs due to the restructuring processes in Spain and the United Kingdom. That game amounts to 3,461 million, although recurring costs have been reduced by 2.4% due to lower personnel and general expenses.
Beyond it, the CET1 capital ratio was 12.6%, which is two tenths more year-on-year. Meanwhile, the liquidity ratio rose to 198%, compared to 172% a year earlier. However, there are quite black spots. For example, profitability.
Both ROE and ROTE stood at 0.02%. The bank faces a more serious profitability problem than the rest of the sector. And for this they are undertaking their restructuring plans and are already thinking of a new strategic plan. The internal turn of the steering wheel began to take place in the fourth quarter, after putting the negotiations with BBVA on hold.
Merger with BBVA
Sabadell was negotiating its merger with the bank of Basque origin but, finally, they did not reach an understanding because of the price. The entity decided to get up from the table to try to continue alone, but knowing that this would require making certain decisions. Not only that of preparing a new strategic plan, but also of shedding its international burden. In this case, the British subsidiary TSB, which this year has reported losses to the group of 220 million euros. Although the bank has always said that this 2021 they hope to achieve financial balance in this territory.
As published by ABC, various UK and international entities contacted Sabadell to stay TSB But none of these options ended up convincing the bank, due to the prices at which the hypothetical offers could move. They do not want to get rid of their subsidiary at any cost, and that first requires “making it beautiful”, it is said. The intention is to sell, but without rushing.
Changes in direction
The landing of González-Bueno as the new CEO has not been the only decision taken by the bank in recent months. Sabadell today announced the appointment of Leopoldo Alvear as the new financial director, “for his incorporation to the bank once the corresponding regulatory authorizations are obtained.”
In this way, Tomás Varela, after more than two decades in the entity, will leave this position of responsibility to make way for the one who until now was Bankia’s financial director. Coup d’état in the entity, in full search of renewed profiles to accelerate digitization and seek new horizons to recover the vigor of the firm.