Banco Sabadell's key stakeholders

BS share performance and shareholders

Share performance

In 2014 the macroeconomic environment, the European Central Bank's decisions on monetary policy and the stress tests carried out on Euro-pean banks by the ECB prior to taking on the role of sole banking supervisor were dominant themes in the financial markets.

In the first half of the year improving sentiment on economic recovery in Spain, the positive reaction to the Group's trading results and the announcement of its new Triple business plan for 2014-2016 helped Banco Sabadell's share price to outperform the rest of the banking industry.

In the second half-year, uncertainty over the economic situation in Europe and the Comprehensive Assessment impacted on stock markets generally and affected the performance of Banco Sabadell's share price.

After the publication by the ECB in late October of stress test results confirming the strength of Banco Sabadell's capital position, an improvement was seen in the performance of the Bank's share price compared with its domestic peers. In its published test results the ECB concluded that the valuations of Banco Sabadell's assets and collateral, as well as its provisions, were appropriate and that, under any of the test scenarios, the Bank would not have any requirement for additional capital (for further details of the test results see the chapter on Risk management).

With the share price standing at €2.205 at 2014 year-end, Banco Sabadell’s market capitalization at 31 December was €8,874 million, making it Spain’s fifth largest banking group by market value and on most other financial measures. At 31 December 2014, the price-to-book ratio at 0.87.

Throughout 2014 Banco Sabadell's management sought to engage ever more actively with institutional investors. This included attendance at 20 international conferences and holding meetings with 646 investors. These increased interactions boosted the visibility of the stock.

The proportion of Banco Sabadell's shareholder base represented by institutional investors increased over the year from 38.5% in December 2013 to 48% in December 2014.

In 2014 the way our shares were perceived by analysts tracking Banco Sabadell showed significant variations, with 70% of them recommending overweight or neutral positions in the stock.

Dividend payments to shareholders in 2014 comprised an interim dividend of €0.01 per share for the year 2013 and a final dividend equivalent to €0.02 per share, paid in the form of shares from the Bank’s holding of treasury shares.

A proposal will be made to the Annual General Meeting for the payment of a dividend for 2014 as follows:

• Flexible shareholders remuneration amounting to an estimated €0.04 per share, in the form of a bonus issue charged to reserves, which shareholders may elect to receive in cash and/or in new shares.
• An additional shareholder payment of €0.01 per share in the form of an allotment of shares of an equivalent value out of the Bank’s holding of treasury shares and charged to the share premium account.

Following the capital-raising actions carried out in 2014 —conversions of mandatorily convertible bonds into shares (for details see the chapter on Capital management in the notes to the accounts)— the number of ordinary shares of the Bank totalled 4,024 million.

T3 Monthly share price movements 2014

T4 Earnings per share and book value per share 2012-2014

T5 Analysis of shareholdings at 31 December 2014

T6 Analysis of shareholdings at 31 December 2013

Shareholders

Banco Sabadell seeks to reward its shareholders' confidence by assuring them of reasonable returns, a balanced, transparent corporate governance system and careful management of the risks arising from its operations.

As part of its continuing efforts to be transparent and to communicate with the markets, in February Banco Sabadell presented its "Plan Triple" business plan for 2014-2016 to the international investor community in London, which gave a very positive reception to the main points of the plan.

Moreover, again as part of a commitment to transparency and communication appropriate to the increased size of the Group, Banco Sabadell's management redoubled its efforts to engage with institutional investors through increased attendance at international conferences and more frequent meetings with investors.

The Bank is also meeting the need for greater communication and transparency by making continual improvements to the reports and information it provides to investors on a regular basis.

G23 Number of investors visited

G24 Days spent on visits to investors

Customers

The Bank's aim is to build lasting and profitable relationships with customers and to support them through all stages of their financial lives; for this reason it emphasizes values such as trust, commitment, communication, closeness and desire to serve (see the section on Mission and values in "About Banco Sabadell").

Both in its day-to-day operations and when taking decisions for the medium term (e.g. business plans), Banco Sabadell is guided by those values and by its customer-centred business model.

In 2014, for example, the Bank met businesses' need for credit through its "believing in business" campaign. In the campaign the Bank made a promise to answer businesses' loan applications within not more than seven days, thus showing support for them and giving them the prompt attention they needed. The Bank's promise of a speedy reply was more than fulfilled, with customers' loan applications being answered within 3.2 days on average.

Quality in customer service

Banco Sabadell is a Spanish market leader in quality of service and satisfaction ratings from both business and individual customers.

Professionalism, care and attention to detail, and insistence on best practice are the Group’s most characteristic values. Once again this year, the ratings obtained by the STIGA organization in its “Equos-RCB” independent survey of service quality at bank branches confirmed Banco Sabadell as one of Spain’s market-leading banks. The survey measures the quality of the service provided by banks in the course of visits to more than 3,500 bank branches. Expert quality assessors appear at branches unannounced, acting like ordinary customers, and rate each branch on a set of 200 variables. STIGA, as an independent research organization, guarantees that its measurements are fair and transparent.

To make this possible, the Bank carries out regular studies that enable it to identify areas for improvement as they develop, both throughout the organization and at each individual branch. These include branch quality audits and customer satisfaction surveys.

Banco Sabadell believes in long-term relationships centred on values such as trust and authenticity. Banco Sabadell seeks to protect the interests of its customers and has control mechanisms in place to supervise the products and services it offers. Prior to offering any financial product on the market, the Bank assesses the product for suitability. Branches are provided with customer information sheets and, where more complex products are involved, an appropriateness or suitability test is carried out as required by the EU Markets in Financial Instruments Directive (MiFID).

(*) The surveys did not extend to the brands most recently added to the Group (Banco CAM, BMN-Penedès, Banco Gallego and SabadellSolbank).

G25 Customer satisfaction

Service channels

The digital revolution makes it possible to combine what is best in traditional banking, such as personal contacts, with the best of the digital world by using technology to extract value from the knowledge we have about customers in any process and via any channel in a simple, transparent way, instantly, in simple end-to-end processes and unrestricted by time or location. These channels enable customers to have their bank close by to use whenever they need it.

T7 Distribution of branches by region

Branch network
Bank's Spanish branches are shown in Table T7 below. For details of the Bank's foreign branches and affiliates, see figure G2 in the section "About BS".

ATM network
A total of 94.7 million transactions, 65% of them card transactions and 35% using a savings book, were done on the Bank's 3,295 ATMs and 374 savings book updating machines, with a total of 644 ATM upgrades (more than 50% of them machine replacements, the rest capacity upgrades) being carried out.

Remote-access channels

BS online
At the end of 2014, BS Online was the Spanish online banking service for individual customers with the thirdhighest rating for web service availability, according to metrics produced by EUROBITS, a specialist online banking benchmarking organization. BS Online Empresa, the Bank’s online banking service for businesses, finished the year in fourth place.

Banking on the move – BS Móvil
BS Móvil, Banco Sabadell’s smartphone banking application, held its position as one of the top six most downloaded apps on the Spanish market, with active users increasing by 40% on the previous year and approaching the one-million mark.

Branch Direct
In 2014, Branch Direct continued its transformation toa more commercial orientation. It was instrumental in more than 7,000 loans being agreed and paid to borrowers within 48 hours of the application being made, and achieved a 35% sign-up rate for products and services on a total of 68,000 offers.

It handled a total of 2,800,000 calls, exceeding its target by 2.5% and earning a quality rating from customers of 4.46 points on a scale of 1 to 5.

Social networking sites
The Bank's followers reached an overall total of nearly 140,000, up 25% on the previous year.

Social networking sites were used to publicize major events such as Instant Banking Hack Day (7,671 tweets generating more than 7 million impressions, compared with the Bank's weekly average of 2.5 million) and the Barcelona Open Banc Sabadell tennis tournament (88 million impacts on hashtag bcnopenbs compared with an average monthly impact of 10 million), as well as 32 branded content videos, 516 blog articles and one of the most viewed advertisements on YouTube (Rafa Nadal, 2,110,555 views). One consequence of this was the selection of the Bank by the Open University of Catalonia ("UOC") to work with the University on its Master's Degree course in Digital Empowerment, as a paradigmatic example of a large organization undergoing a radical transition to a digital culture, and now in a position to share its experience of success in the field.

G26 BS Móvil active users in 2013 and 2014

G27 BS Online enrolments

G28 Internet usage ratio
(online transactions as % of total)

G29 Transaction volume
(in thousands)

Human resources

Talent and human capital management forms an essential component of the “Triple” strategic business plan along with other key action areas of the plan. It encompasses drivers of organizational change and development as well as a wide-ranging and completely updated view of the Human Resources function.

In the area of organizational change and development, three strategic priorities have been identified: organization-wide talent management to meet the needs of the enlarged Group, raising the bar on employee performance across the organization and securing employee involvement in and engagement with the Group's future development.

Composition of Group employees

At the end of 2014 the Banco Sabadell Group was employing a total of 17,529 people, an decrease of 548 compared with the previous year. The average age of employees was 43.1 years and the average length of service was 17.2 years. The gender split was 49.9% men and 50.1% women (G30)

G30 Employee breakdown by gender

1	Men	49.9%
2	Women	50.1%

Projects in 2014

In-service and leadership training
Along with the various initiatives being pursued under the Master Plan, training programmes and projects are being carried out as part of the Group's policy of active talent management. This covers sales and sales management training for business development teams, training for integration, university certification of the Bank's in-house training schemes, Senior Management and management quality training, training in compliance and training in new banking business models.

Mobility
A total of 18 foreign placements were made in 2014 and 100 interviews were conducted with internationally mobile employees from the total of 347 employees from across the Banco Sabadell Group who in 2014 showed an interest in taking up appointments in foreign countries.

Employee engagement and volunteer programme
Social and volunteer programmes and initiatives are publicized on the employee portal under the "Solidaris" label. The success of these programmes year after year caused the number of participants to increase substantially and led to a rise in the number of activities in 2014, many of them as a result of suggestions from employees.

Achievements and awards
Talent Mobility Award
Banco Sabadell was named Best Spanish Company in the first Talent Mobility Awards, which are given in recognition of best practice in talent mobility, an integrated management process that concerns itself with an organization's ability to identify, develop and deploy talent effectively.

The award pays tribute to Banco Sabadell's success in managing talent, as demonstrated in a succession of integrations following the eight corporate mergers of the last few years. Consistency, innovation and an emphasis on in-house talent were among the qualities cited by the jury in awarding the first prize of its kind to our organization.

Randstad Award
Each year the Randstad Award identifies the most attractive companies to work for in different countries.The winner is chosen based on the findings of the most extensive study of employer branding anywhere in the world. Moreover, unlike other studies, it looks at the perceptions of employees only and takes a large sample of 7,000 people in each country between the ages of 18 and 65 who are asked about their impressions of the 150 biggest employers in their country. Companies cannot ask to take part in the study and winners are selected on the basis of their attractiveness as employers once the respondents' answers have been collated. This method ensures that the study is totally objective.

Oxfam-Intermon Trailwalker
Banco Sabadell won the prize for the largest number of volunteers, which is given for success in mobilizing people (26 teams) and also for the communication skills deployed in the promotion of this fundraising event.

Qualis Awards for Excellence
Established by the Bank in 2002, the Qualis Prizes are awarded to people and groups of people who have been particularly noted for the excellence of their work during the year.

In 2014 the Qualis prizes, now in their 12th year, were awarded for performance in 2013. This year the arrangements were changed in keeping with the increase in the size of the Group since 2003 when the prizes were instituted.

The Bank felt that it was time to change the structure of the prizes for best branch so as to move from a prize for overall excellence to a system that gave recognition to the best branches in each Regional Division.

Employee participation for improvement and innovation
To encourage employee engagement a Web 2.0-based collaborative platform, BS Idea, has been set up on the corporate Intranet. The platform provides an easy, amicable way for employees to use their creativity and put forward suggestions for improvements in working methods or additions to the range of products and services.

In 2014 a total of 5,179 employees were active participants on the site and 3,024 ideas were put forward.

To supplement the quarterly competition a "Challenge Week" was introduced in which, for a single week, all employees are asked to produce ideas on a strategic theme.

Not only the ideas produced by employees are welcomed, any customer or other person can make comments, suggestions or requests to Banco Sabadell via its pages on Facebook or Twitter or make use of the feedback platform at www.feedback.bancsabadell.com. Customers can use the platform to put forward suggested improvements or new ideas on remote banking channels, mobile phone services, operating processes, product features, accounts, credit and debit cards and so on.

Customer and user protection

Any customer or user of the Group can contact the Customer Service Department (CSD) for the resolution of any complaint or claim that has not been settled with the branch in the normal way.

The CSD is independent from the business and operational side of the Group and is governed by the Group’s own rules and procedures for the protection of customers and users of its financial services.

Customers and users may also avail themselves of the Customer Ombudsman, a forum that is independent of the Group and is competent to decide on claims made to it either directly or on appeal from a prior procedure (G31 & G32).

Decisions of the CSD or the Ombudsman are binding on all Bank units or departments.

Of the total complaints and claims examined by the Customer Service Department, 39.2% resulted in a decision favourable for the Bank, 8.4% were settled by agreement with the customer or user and 0.8% were resolved partly in favour of the customer or user. In 0.9% of cases customers withdrew the claim, and 42.1% were resolved in favour of the customer or user.

At 31 December, 6.0% of cases had yet to be ruled on by the regulatory bodies and the Customer and Investor Ombudsman. Finally, the Bank declared itself not to be competent in 2.6% of the cases.

G31 Complaints and claims handled

G32 Complaints and claims - breakdown

1	Complaints	11.1%
2	Claims	88.9%