BancoSabadell An introduction to the group HSBC Iberian Banking Conference November 2001 Juan M. Grumé Investor Relations
Banco Sabadell: 120 years of history 1881 1975-2000 Founded by a number of Sabadell industrialists and professionals to provide financing to the local economy Expansion outside Catalonia Expansion into non-traditional banking businesses 1996 Acquisition of Natwest Spain and Banco de Asturias 2000 Design of a strategic plan: focused business units Establishment of BancSabadell d Andorra Creation of a core shareholder group: - Cross shareholding with BCP and JV in e-banking - Core- shareholding agreement with La Caixa and acquisition of Banco Herrero 2001 Stock Exchange listing Incorporation of Solbank into Banco Sabadell 2
Shareholder structure Wide retail shareholder base 1 15.0% 8.5% 76.5% 1 Free float: 76.5% (47.000 shareholders, aprox.). 3
Joint ventures ActivoBank 45 % Banco Sabadell 30 % Banco Comercial Português 15 % ONI 10 % Managers Bank and broker. Asset management Coverage: Spain and Portugal 50 % Banco Sabadell 50 % Banco Comercial Português Internet Portal of financial services for small and medium sized companies Coverage: Spain and Portugal Dexia Sabadell Banco Local 60 % Dexia Group 40 % Banco Sabadell Specialized bank : Public Sector finance Coverage: Spain 51 % Banco Sabadell 49 % Local shareholders Retail banking Coverage: Andorra 4
Banco Sabadell today Domestic retail bank 94% of total revenues from domestic retail banking Reference player in the Spanish market 4 th largest among banks and 6 th largest among banks and savings banks Multi-specialised on the most profitable business segments Top player in SMEs and professional associations Leveraging on SMEs and professional association businesses to tap into the mass affluent sector Leader in foreign trade banking (9.3% market share) Attractive geographical coverage One of the most dynamic financial institutions in Spain Very significant presence in the largest and wealthiest regions: Catalonia, Madrid and Levante Strong market position in the Asturias and Castilla- León regions as a result of the acquisitions of Natwest Spain and Banco Herrero Cross-shareholding agreement with BCP Establishment of BancSabadell d Andorra Joint acquisition of Ibersecurities Core shareholder agreement with La Caixa and acquisition of Banco Herrero JV with Dexia Launch of new e-bank: ActivoBank 5
Target: To become the leading domestic SME bank Global BBVA BSCH Regional focus Domestic La Caixa Caja Madrid Caixa Cataluña Sabadell Popular Bankinter Regional Saving banks Mass banking Value added banking Universal Business focus 6
Banco Sabadell: A focused strategy Business focus SMEs Mass affluents Professional associations Domestic retail banking model Focused on growth Focused on the most important and fastest growing client segments, products and geographical regions Organic Through opportunistic acquisitions Corporate culture 6 new business units Clear responsibilities and accountability New MIS to monitor individual performance 7
Multi-segment strategic approach Further specialisation Specific training for each of the commercial teams New distribution channels: SMEs Portal, Mass Public Portal and Professionals Portal Develop a standardised offer for the retail segment Strengthen the presence in key regions Strengthen the management teams in the Madrid and Levante regions Enlarge and strengthen the network of investment advisors for managing private client portfolios New teams of specialists and decentralised promoters Develop complementary businesses and market niches Develop the Bancassurance business as an independent business unit Aggressive expansion plan for Solbank in coastal areas 8
Branch network As of 30/10/01 908 domestic plus 16 international 924 28 2 205 57 5 121 3 4 7 3 13 69 319 24 36 5 7 9
Geografical growth GEOGRAPHICAL AREAS MARKET BRANCH MARKET CONCEPT SHARE DENSITY ATRACTION A HIGH HIGH HIGH CONSOLIDATION Increased cross-selling efforts to reinforce client loyalty and profitability B LOW MID HIGH C LOW LOW MID ORGANIC GROWTH Increase branch and market awareness. Extra-effort devoted to market penetration Organic growth NON-CORE Growth by acquisitions Acquisitions only if provide defendible platform from where to build significant market share 10
Banco Sabadell is the 4th largest banking group in Spain As of 30/09/01 Shareholders equity bn 18,9 14,5 2,0 1,9 0,8 BSCH BBVA Popular Sabadell ¹ Bankinter Net attributable income mm 1.992,8 1.816,0 460,9 162,5 71,4 BSCH BBVA Popular Sabadell Bankinter Source:, company reports 1Equity Adjusted for Banco Herrero s Goodwil 11
Banco Sabadell is the 4th largest banking group in Spain Total assets bn As of 30/09/01 344,3 297,5 36,0 25,2 22,4 Customer loans bn BSCH BBVA Popular Sabadell Bankinter 167,3 139,7 26,5 17,7 15,8 BSCH BBVA Popular Sabadell Bankinter Funds under management 1 bn 211,9 255,5 29,0 22,7 19,1 BBVA BSCH Popular Sabadell Bankinter Source: Company reports 1Customer deposits + investment funds + pension funds 12
Market Shares 1 1998 1999 2000 30/6/01 Private sector loans 2,0% 2,3% 2,8% 2,9% Private sector deposits 2,2% 2,4% 2,8% 2,9% Investment funds 2,4% 2,1% 2,6% 2,7% Pension funds 3,7% 3,5% 3,6% 3,6% Domestic branches 1,9% 1,9% 2,7% 2,4% Source:Annual report, Banco de España, Inverco 1 Pro forma 13
Key value drivers in Banco Sabadell As of 30/09/01 Strong Capital Base Total Tier I 8,58% Strong Asset Growth Asset Growth YoY 34.0% Strong net income Net interest Margin 2,89% Extremely good risk profile NPL provisions/npl 1 299.0% 14
Solvency. BIS Ratio Core Capital Lower Tier I Tier II 12,98% 12,63% 2,02% 1,18% 1,97% 11,28% 11,49% 1,37% 2,91% 1,57% 1,46% 1.40% 300 M Subordinated Debt issue on July 01 10,96% 9,48% 8,34% 7,12% Total Tier I: 8.58% 31/12/98 31/12/99 31/12/00 30/9/01 15
Strong Asset growth Total Assets m 25.153,6 18.613,4 14.684,1 15.378,8 31/12/98 31/12/99 31/12/00 30/9/01 16
Strong Net interest Margin 4,5% 3,9% 3,3% 2,7% 2,1% 1,5% 1998 1999 2000 30/9/01 Banco Sabadell BBVA BSCH Popular Bankinter 17
Extremelly good risk profile NPL /Total Loans 1 % 1,3 0,92 0,57 0,56 1 On balance sheet figures 31/12/98 31/12/99 31/12/00 30/9/01 18
Extremelly good risk profile NPL Provisions/NPL 1 % 299,0 261,8 169,0 140,9 31/12/98 31/12/99 31/12/00 30/9/01 1 On balance sheet figures 19
Branch rationalisation 967-36 Decrease -43-15 12 924 Banco Herrero 264 Solbank 39 Banco 58 Asturias 6 Banca Privada 557 Banco Sabadell 31/12/00 Merger Solbank/ Banco Sabadell Banco Asturias / Banco Herrero overlapping New openings 30/10/01 20
Branch rationalisation Asturias 151 152 64 54 León 7 3 31 32 Market share Asturias León combined 30/06/01 Loans 1 17,20% 8,70% Deposits 1 20,00% 4,90% Branches 1 25,50% 7,30% 1 Source: Banco de España Banco Asturias Banco Herrero 21
Up to 45 1 new Solbank branches before the end of 2002 to provide services to foreigners living in Spain 4 1 + 6 9 + 12 6 + 13 5 Solbank branches at 30/09/01= 38 New branches before 30/06/02= +30 + 4 + 9 1 15 offices still pending of location 22
Network expansion dic-00 sep-01 % change Pro forma with Herrero Branches 967 925-4,3 Staff 7.852 7.768-1,1 ATMs 1.071 1.045-2,4 Cards 934.271 1.018.825 9,1 1 Customers 796.400 1.195.200 50,1 1 Dic 00 Group BS previous to incorporation of B.Herrero 23
Geographic Asset distribution Gross loans 17.957 at 30/09/01 Domestic lending 93,67% OCDE 4,74% Others 1,59% 24
Non Domestic Asset Distribution Amount on Total Loans m Central America 153,69 0,86% South America 46,45 0,26% Asia & Pacific 4,40 0,02% Middle East 2,55 0,01% Africa 7,60 0,04% Europe 71,13 0,40% TOTAL 285,81 1,59% 25
Organisational structure Business units Banco Sabadell Group SMEs banking Commercial banking Bancaassurance Asset Management International banking Structured and project finance brands Banco Sabadell Group Banco Sabadell Solbank Banco Asturias Banco Herrero Sabadell Banca Privada 26