The group is organized into the following
business units:

Commercial Banking
Corporate Banking
Markets and Private Banking
Asset Management
BS America
Banc Sabadell d'Andorra
Commercial Banking

The largest of the group’s business lines, Commercial Banking focuses on providing financial products and services to large and medium-sized businesses, SMEs, retailers and sole proprietors, individuals, occupational groupings, and bancassurance. Commercial Banking operates under the flagship SabadellAtlántico brand in most parts of Spain and also under a number of regional brand names (See Channels for a detailed list of branches).

Corporate Banking and Global Businesses

Offers a range of products and services to large corporates and financial institutions in Spain and abroad. Its activities embrace corporate banking, structured finance, corporate finance, development capital, international trade and consumer finance.

Markets and Private Banking

The division offers savings and investment management services. These range from research into alternative investment products to securities market trading, and include active wealth management and custody services. The unit comprises SabadellUrquijo Private Banking, the group’s private banking arm; Investment, Products and Research; Treasury and Capital Markets; and Securities trading and custody services.

Asset Management

In 2012 the division adopted a fresh approach and a revamped structure to manage real estate and non-performing assets. Solvia, the company tasked with managing the group’s real estate assets, boasts a wealth of expertise in every aspect of the property development cycle. In 2013 a dedicated unit was set up for the resolution of mortgage loans to individual borrowers by taking early action in cases of default. Solvia also has a retail sales unit and sales teams specializing in putting together portfolios of assets to be offered to institutional buyers or disposing of assets with special or unusual features.

Banco Sabadell also operates in foreign countries through a number of businesses:

BS America

This operation comprises a number of business units, affiliates and representative offices which together provide financial services in the corporate banking, private banking and commercial banking fields. It has the capability and experience to provide a full range of banking services, ranging from highly complex and sophisticated products for large corporate clients, including structured and project finance, through to products for the individual customer. This business is conducted through Banco de Sabadell Miami Branch, Sabadell United Bank, and Sabadell Securities.

BancSabadell d’Andorra

A bank operating within the Principality of Andorra in which Banco Sabadell holds a 50.97% stake. Its target customers are medium- and high-income individuals and larger companies operating in the Principality.

Details of pre-tax profit and other key performance data for each of these group businesses for 2013 are set out below:

Thousand euro          
  Commercial
Banking
Corporate
Banking
Sabadell
Urquijo
Private Banking
Investment
Management
Real Estate
Asset
Management
Net interest income 1,321,702 175,749 10,145 652 67,835
Fees and commissions (net) 590,438 33,789 36,609 41,460 (2,763)
Other income (48,835) 5,233 3,253 3,285 (6,970)
Gross income 1,863,305 214,771 50,007 45,397 58,102
Operating expenses (1,255,472) (27,170) (38,319) (20,046) (191,664)
of which: personnel expenses (659,824) (7,031) (24,961) (12,551) (52,985)
Net provisions 0 0 0 0 (301)
Impairment losses (353,013) (108,479) (2,566) 0 (362,216)
Other income/expense 0 0 0 (13) (520,861)
Operating profit/(loss) 254,820 79,122 9,122 25,338 (1,016,940)
Profit before tax 254,820 79,122 9,122 25,338 (1,016,940)
Ratios (%)          
ROE (Profit/average shareholders’ equity) 5.6% 7.7% 20.7% 80.5% (44.7%)
Cost: income ratio (general administration
expenses/gross income)
67.4% 12.7% 76.6% 44.2% 329.9%
Other information          
Employees 12,180 96 269 147 807
Branches in Spain 2,356 2 12

T1

Commercial Banking in 2013

Customer segments

Business banking

Significantly, 67% of the unit’s business is accounted for by large corporates. The “Cuenta Expansión Empresas” business account was launched to complete the Bank’s competitive product offering designed to win new customers. The group’s aim of increasing lending and helping businesses gain access to credit was realized through its “Plan Creciimiento” (Plan for Growth) scheme. In the area of foreign trade the Bank shown its firm commitment to supporting Spanish companies in their business ventures in foreign markets by launching its “Exports for Growth” programme.

Individual customers

Record figures for customer growth were achieved for the third year in succession.

Milestones: introduction of the group’s Personal Banking business model at SabadellCAM branches; increased market share in mortgage lending; growth of consumer loan approvals in 2013.

Banco Sabadell, a market leader
in quality of service to customers

(according to Stiga’s EQUOS-RCB Bank
Branch Quality Survey for 2013).

Milestone achievements by other group brands:

SabadellHerrero
  • Business focus on increasing market shares in both customer numbers and deposits.

  • Leadership in ICO credit lines reaffirmed with market shares of 39.3% in Asturias and 22.2% in León.

  • Loan defaults contained.

SabadellGallego
  • New brand launched in November 2013.

  • Incorporation of Banco Gallego branches into group and change of brand name to SabadellGallego.

SabadellGuipuzcoano
  • Successful drive to attract new customers, especially businesses.

  • Loan defaults contained.

SabadellCAM
  • Integration of processes and people (transfer of group culture and values, training, tutoring and support) - one of the year’s major challenges.

  • A key aspect in customers’ quality of service perceptions: measures to equip and prepare branches to operate as part of Banco Sabadell network.

  • Increased brand awareness and media presence; increase in acquisition of new customers and long-term customer relationships.

Bancassurance, a major contributor
to group performance..

Bancassurance

At 31 December 2013 the total volume of funds under management in insurance policies and pension funds was €12,430.8 million. Life and non-life issued premiums totalled €319.2 million.

In 2013 Bancassurance, the group’s insurance and pensions business, generated an overall net profit of €82.6 million and €64.6 million in commissions.

During the year Bancassurance worked hard to restructure its business. As a result the insurance and pensions business is now structured in the following way:

  • Sabadell Vida, Sabadell Pensiones and Sabadell Seguros Generales, operating since 2008 as a joint venture in partnership with the Zurich insurance group.

  • Mediterráneo Seguros Diversos operating as a joint venture with CASER since 2011.

  • Mediterráneo Vida, Sabadell Mediación Operador Bancario de Seguros Vinculado and Banco Gallego Vida y Pensiones, wholly-owned subsidiaries of Banco Sabadell.

Channels

Banco Sabadell is an industry leader in harnessing technology to offer its customers innovative services that can be accessed via any channel: BS Online, electronic banking, mobile banking, telephone, email, chat, videoassistance, Twiter, Facebook, GooglePlus and ATM.

Our ambition is to make our branches into a multi-channel network so that employees and customers can interact in different ways; at the same time, we are making banking easier and simpler so that service is what really makes the difference.

Branch network

At the end of the year Banco Sabadell was operating a total of 2,418 branches, including its 2,370 branches in Spain. The distribution of these branches by region and brand name was as follows:

Spanish branches at 31 December 2013

Spanish branches
at 31 December 2013

  • SabadellGallego (117)
  • SabadellHerrero (178)
  • SabadellGuipuzcoano (128)
  • SabadellCAM (508)
  • SabadellAtlántico (1230)
  • SabadellSolbank (101)
  • SabadellUrquijo (12)

Banco Gallego (outside Galicia) has 66 branches; SabadellSolbank (Lloyd’s) has 28 and ActivoBank 2.

International network at 31 December 2013

International network
at 31 December 2013

  • Subsidiaries and associates
    • Andorra
    • USA
    • Portugal
  • Branches
    • France
    • Morocco
    • United Kingdom
    • USA
  • Representative Offices
    • Algeria
    • Brazil
    • China
    • Dominican Republic
    • India
    • Mexico
    • Poland
    • Singapore
    • Turkey
    • Venezuela
    • United Arab Emirates
    • USA
Professional/occupational groupings, agent partners and associate banking

Two important initiatives during the last four months of the year were the setting up of an Enterprise Department and the launch of the BStartup programme. This, it is hoped, will position Banco Sabadell as the bank that caters for individual entrepreneurs and new business ventures. There was also a rise in the number of partnership agreements with professional associations other occupational groupings, an area in which Banco Sabadell is an industry leader.

ATM network
Transactions
  • 91.2 million
    • 61% credit/debit card
    • 39% savings booklet updates

ATMs
  • 3,222 ATMs
  • 358 booklet updaters
  • 1,168 ATM replacements or capacity upgrades
Service improvements
  • Better machine and cash monitoring
  • Improved navigation for frequent transactions
    (cash withdrawal, booket update and account balance)
  • New features and operational consolidation
    (e.g. no-card statement requests or Instant Money by mobile phone)
Remote-access channels
BS Online

At the end of the year BS Online was the online banking service most highly rated for availability of web services for individual customers of Spanish banks according to metrics produced by Eurobits, a specialist online bank benchmarking organization. BS Online Empresa, the Bank’s online banking service for businesses, ended the year in second place for business web-based services.

BS Móvil

BS Móvil, Banco Sabadell’s smartphone banking application, held its position as one of the top eight most downloaded apps on the Spanish market (see Figure F4).

BS Online sign-ups

F1  BS Online sign-ups

Internet use ratio (Online transactions as % of total)

F2  Internet use ratio
(Online transactions as % of total)

Transaction volume (in thousands)

F3  Transaction volume
(in thousands)

BS Móvil active users, 2012–2013

F4  BS Móvil active users, 2012–2013

Branch Direct

In 2013 Branch Direct, the “virtual office” part of the group’s remote banking services, continued its transformation to take on a more commercial role. Its focus on winning new customers and selling consumer finance products led to more than 13,000 new customer sign-ups and more than 6,100 loans being arranged.

During the year Branch Direct received and handled more than 2,601,000 enquiries, 61% more than in the previous year. The telephone banking service achieved a service availability ratio of 96.27% (calls answered as a proportion of calls received). Users rated the service at 4.39 on a scale from 1 to 5, based on the more than 308,649 questionnaires sent.

Social networking sites

In 2013 Banco Sabadell continued to grow and develop its presence on social networking sites. The investment in social networking and technological innovation has been a key success area for Banco Sabadell. The group also continued to invest in customer service, sound management and quality of service, being nominated for best service on twitter in the Tweet Awards.

Followers 2013

F5  Followers 2013

New contact net accounts
On Twitter On Facebook
@SabadellBank SabadellBank
@Bstartup  
@bspress  

Banco Sabadell became
the first Spanish bank to be the subject
of a case study on Facebook.

The “Som Sabadell” flashmob, went viral with over 31 million viewings, making it one of the top 20 most viewed ads anywhere in the world. In 2013 Banco Sabadell further developed its ability to produce its own content by publishing 360 articles on its blog and making 70 videos. Having its own TV channel, bancsabadellTV, means being able to transmit live events such as video tutorials and lectures. All these activities have earned Banco Sabadell more than 100,000 followers on social networking sites (see Figure F5).

Corporate Banking and Global Businesses in 2013

The year 2013 was a year of transformation for Corporate Banking marked by a change in strategic focus and a change of organizational culture to enhance our ability to deliver excellence to customers operating in a global market.

Banco Sabadell, once again,
a Spanish market leader
in Structured Finance.

Structured Finance

In the international sphere we strengthened our position in the US, where we embarked on a key project to take part in loan syndication deals in Mexico. Our new business as an operator on Spain’s alternative fixed-income market (“MARF”) made a good start.

Corporate Finance

The year saw the successful completion of four transactions in the aeronautical engineering, civil/harbour engineering, underground parking lot and real estate sectors.

Development capital

Acting through two subsidiaries, Aurica XXI, SCR de Régimen Simplificado, S.A. and Sinia Renovables, SCR de Régimen Simplificado, S.A. the Bank supports the growth of non-financial companies by providing short-term capital and active assistance. This support was continued in 2013.

International trade

The Bank’s international trade business had another very busy year, thanks in part to the growth in exports. Banco Sabadell has always been a pioneer in seeking a presence in foreign markets such as China, where it has two offices (in Shanghai and Beijing), India, Singapore, Turkey, the United Arab Emirates and Algeria. Its foreign branches and offices continue to offer significant added value to the international operations of Spanish businesses. Its Casablanca branch, the first to be opened in Morocco by a Spanish bank, met all the targets set for it and continued to make solid progress.

Consumer Finance – SabadellFincom

The prolonged contraction in consumer demand did nothing to prevent SabadellFincom from continuing to grow in both revenue and market share compared with the previous year. Additionally it was able to reduce customer default levels to 4.99% and build up provisions to 105% of doubtful loans.

The Bank won awards from the
British specialist corporate finance magazine
Acquisition International

(being named “M&A Advisory Firm of the Year - Spain” and “Corporate Finance Firm of the Year - Spain”).

Markets and Private Banking in 2013

SabadellUrquijo Private Banking

SabadellUrquijo Private Banking is the division of Banco Sabadell specialized in serving the group’s private banking clients. Much work was done in 2013 to raise public awareness of SabadellUrquijo Private Banking as a leading player in serving high-income clients. Business increased by 4.7% over the year to reach a total of €23,963 million and a total of more than 28,700 private banking clients.

Investment, Products and Research

The division continued to focus on financial market analysis and research to identify the right asset allocation strategies as a guide to investment policy and product planning. This last activity proved to be particularly important and beneficial in 2013 now that we are seeing an upturn in expectations for economic growth on the European periphery that had been anticipated and factored into our investment recommendations.

Assets under management in Spanish-domiciled mutual funds of financial assets amounted to €6,255.5 million, up 40.8% on the previous year’s total for Spanish-domiciled funds.

Treasury and Capital Markets

In 2013 despite the continued weakness of the economy and a financial environment characterized by interest rates falling to all-time lows, the division was able to meets its targets thanks to persistent sales efforts and an increase in business activity by customers in foreign markets leading to a corresponding increase income from FX products. Banco Sabadell was the first bank to be approved as a registered member and investment advisor by MARF, Spain’s new alternative bond market, to be able to offer businesses a complete service in all areas of finance. In 2013 the Bank was the first Spanish bank to join EurexOTC Clear for interest rate swaps (IRS’s), thus anticipating the coming into force of new regulations on trading IRS’s through clearing houses.

Securities trading and custodian services

2013 was a year of recovery in volumes and asset values and this provided a substantial boost to the group’s securities business, which saw growth in both volumes and margins compared with the previous year (see Figure F6).

In 2013 Banco Sabadell mutual funds
earned outstanding accolades. Sabadell
Inversión was the only Spanish-domiciled
fund manager to be awarded a high
qualitative grading by Standard & Poor’s
Capital IQ Fund Research.

Banco Sabadell confirmed its position
as a market leader by trading volume, taking
second position among Spanish market
members with a share of more than 9.5%.

Volume
vs Market Share (milion)

F6  Volume vs Market Share (milion)

  • Volume
  • Market Share

Asset Management in 2013

Commercial sales of
real estate more than met their
targets in 2013 and continued
to outpace the market.

The year 2013 saw sales of real estate assets increase by 40% on the previous year to a total of €3,120 million on higher-than-expected sales of 18,501 units.

Key developments on the marketing front in 2013 included the launch of a special international channel designed to sell properties to residents of foreign countries; and an “open platform” arrangement under which, for optimum marketing efficiency, properties could be offered to the market by more than one agent.

Solvia Inmobiliaria is currently Spain’s second largest bank-operated real estate web site and ninth largest real estate web portal. It is also the country’s second most widely recognized brand in the residential property and construction sectors, with a 40% brand awareness rate among potential property purchasers.

In addition, a number of measures were taken to add value to the properties being offered for sale and this made it possible to raise prices for the first time since 2007.

The year 2013 saw an upturn in investment in the wholesale real estate market. Banco Sabadell completed a number of sales of property portfolios. These sales included one portfolio of some 1,000 residential properties and portfolios of assets previously written off, building plots and office building developments.

Sales of real estate by the group (by value and number of sales)

F7  Sales of real estate by the group (by value and number of sales)

Número de transacciones

F8  Number of transactions (units)

Sabadell America in 2013

Banco Sabadell’s business in the US amounts to more than USD 8,000 million with total assets of USD 6,200 million, making it Florida’s seventh largest local bank by total assets.

Banco Sabadell Miami Branch

At the close of the year Banco Sabadell’s operating branch in Miami had more than USD 5,500 million in customer deposits and funds under management. Client portfolio management was up 45%. In 2013 the Miami branch continued to provide finance for projects in the energy and tourism sectors, mainly in the US and Mexico.

In November it acquired the assets and liabilities of Lloyds TSB Bank’s branch in Miami. The takeover accoun-ted for a large part of the growth in Banco Sabadell’s US business during the year.

Sabadell United Bank

During the year Sabadell United Bank made further progress in implementing its operating and sales efficiency drive, with a particular emphasis on promoting its mortgage plan to customers and developing alternative sales and customer service channels. As 2013 drew to a close, it was managing assets of some USD 3,866 million with deposits close to USD 3,200 million and loans and advances approaching USD 2,900 million. It was serving more than 45,000 customers. Sabadell United Bank reported a net profit for 2013 of USD 45 million.

In December it signed an agreement to purchase Miami-based JGB Bank whose total assets amount to some USD 500 million. It is expected that the transaction will complete and that JGB Bank will be merged with Sabadell United Bank and integrated on its systems in the course of 2014.

Sabadell Securities

Sabadell Securities USA Inc., an SEC-registered investment consultancy, operates as a stockbroker and advisor to securities market investors. The business is both a complement to and a strengthening factor in the BS America strategy.

Other businesses

BancSabadell d’Andorra

BancSabadell d’Andorra is the Andorran bank that has done best since the onset of the financial crisis in 2008, having shown sustained bottom line growth with a profit in 2013 of €6,900, a ROE of 11.5% and a healthy 10.4% growth in funding. It has also been able to maintain lending at previous levels.

In 2013 Sabadell United Bank
won another 5-star rating
from Bauer Financial, the highest
grade awarded by the independent
US bank rating organization.