Corporate Banking and Global Businesses

The year 2014 was critical for the Corporate Banking and Global Businesses unit: a time for finalizing and setting in motion plans that would lead to fulfilment of the goals set out in the "Triple" business plan. Significant progress was made in areas such as internationalization (including a "priority action markets" plan), finalizing a new relationship model for large corporate customers, a start on establishing a corporate banking and structured finance business in Mexico, launching the “Fincom 1000” plan and the design of a new and innovative investment process for BS Capital. In 2015, efforts will continue to be focused on transforming and internationalizing the global business through tighter cooperation between teams to bring to completion a major project that will deliver value for the community and returns for our shareholders.

Corporate Banking

The implementation of a new Corporate Banking business model that commenced in 2013 came to fruition in 2014, achieving notable improvements in our "closeness to the customer" business (cash management, payments and collections, etc.), with revenue increasing by 15%. A key policy aim in relation to international business was to have the full resources of the Bank available for this activity. This helped to increase both income (up 32%) and the volume of transactions handled (up 69%). The gross margin (13.4%) was in line with the previous year, and the cost:income ratio was very low (2.5%), with the result that profit after provisions amounted to €70 million.

T2 Corporate Banking

Structured finance

The Bank completed another year as a leader in structured financing in Spain. It is one of the principal banks engaged in the origination and structuring of financing deals for customers, including project finance and corporate and acquisition finance. In 2014, origination amounted to over €4,300 million, spread over a total of 193 deals.

A notable success on the international front was the successful entry into the Mexican market through subsidiary Sabadell Capital, through which it participated in numerous syndicated loan deals with Mexican companies; operations in the United States were also strengthened. Fee income in these and other foreign markets where the unit operates increased by 71.2%. 31.6% of the fees earned by Structured financing in 2014 was generated in foreign markets.

Another area of business that makes it possible to offer alternatives to customers and which gained in strength in 2014 is bond origination for customers, a joint initiative with the Treasury department, enabling the Bank to position itself as a leading player on Spain's Alternative fixed-Income Market (Spanish initials: MARF).

Corporate Finance

The year 2014 was a busy time for the Bank's merger and acquisition advisory business. Seven transactions were brought to a successful conclusion in the sports complex, automotive engineering, logistics, mining, fluid handling, renewable energy and funeral services industries. Among the year's other milestones were an increase in the number of cross-border mandates thanks to the Terra group with its global network of contacts and its presence in 20 countries, and the launch of a new corporate finance business in Mexico through the forging of links with three local M&A companies.

In 2014, the Bank was named Best Corporate finance firm Spain and M&A firm of the Year Spain.

Development capital

BS Capital channels and manages its investments through three investment vehicles: Aurica XXI for development capital, Sinia Renovables SCR for renewable energy projects and BIDSA for investments of a more institutional nature.

Aurica XXI actively managed the subsidiaries portfolio in 2014. There were no acquisitions in the period, and Aurica XXI sold its 25% equity interest in Eurofragance, S.L., generating a profit of €9.5 million for the Group.

During the year, Sinia Renovables continued its careful monitoring of the portfolio of renewable energy projects and firms. In 2014, the Spanish government enacted Royal Decree-Law 413/2014 to provide a stable legal framework, thus encouraging investors to return to the Spanish renewable energy sector. Sinia Renovables took the opportunity to divest certain holdings (Adelanta Corporación, S.A. and Parque Eólico Veciana-Cabaro, S.A., generating a capital gain of €1.7 million). Following these disposals, the renewable energy portfolio managed by Sinia Renovables totalled 127MW.

International Operations

In 2014, International Operations met all the business development targets that had been set for it in the first year of the “Triple” business plan in relation to markets, customers and products, and it underwent a reorganization designed to increase its capabilities and make it a leader in foreign market specialization.

The Bank’s International Operations Division organized the first Sabadell Banking Conference, which brought together close to 100 financial institutions from 32 countries and provided Banco Sabadell with an opportunity to showcase its business strategy, raise its profile, and build closer ties of cooperation and trust with other leading banks and institutions. Direct approaches were made to more than 360 correspondent banks in five continents, enabling the Bank to capture business worth some €1,340 million.

The Bank also gained healthy market shares in documentary credits received from correspondent banks, winning a 29.8% share of export documentary credits — 5% more than in 2013 — based on SWIFT traffic data.

Consumer finance: Sabadell fincom

The fist signs of an upturn in private consumption and consumer lending helped Sabadell fincom to see an increase in the number of loans compared with the previous year, as well as an increase in market share. Business volumes continued to improve during the year compared with previous years, with significant improvements in interest spreads and operating income, while loan delinquency was reduced to 3.9%.

During the year, a total of 185,000 new loans were arranged through 6,000 points of sale all over Spain. The amount of new lending arranged in 2014 totalled €340.9 million. The Bank also continued its programme of operational enhancements and technology upgrades with the aim of supporting business growth, with the result that the cost:income ratio was reduced to 32% at year-end.