Markets and Private Banking

Markets and Private Banking showed once again that it was well equipped to create and supply high added-value products and services to deliver good returns to customers, increase and diversify the customer base and ensure that investment processes remained consistent and were based on disciplined analysis and proven quality. There was a also move towards a multi-channel approach to customer relationship management.

SabadellUrquijo Private Banking

A notable development that reflected the aims of the "Triple" business plan and the business transformation drive was a change in the balance sheet structure: mutual funds, discretionary portfolio management services and SICAVs gained in importance at the expense of more liquid assets with less attractive returns such as time deposits, demand deposits and commercial papers. This change in the composition of clients' investment portfolios resulted in an increase in profitability for Private Banking.

As of December 2014, 1,897 new discretionary portfolio management mandates had been signed for an overall value of €639 million, bringing the total volume under management to €1.5 billion. Mutual fund and SICAV investments under management increased by over €1,618 million, 32% with respect to 2013.

An indication of the growing strength of the business was a 5.4% share in SICAVs , which reached 183 in number and held investments worth €1,702 million. That was a 19.7% increase with respect to 2013 year-end. The unit saw its business volumes increase by 7.1% over the year to reach a total of €25,251 million, while its customer base exceeded 30,900.

Quality, productivity and efficiency were key themes in the day-to-day operation of the business.

In 2015 the focus will remain firmly on offering a quality advisory service to meet specific needs, supported by appropriate tools that will be made available to customers.

T3 SabadellUrquijo Private Banking

Investment, Products and Research

T4 Investment, products and research

Research

During the year the research unit continued to ratchet up its production of reports on equity market investments and corporate bonds. Greater emphasis was placed on the analysis and coverage of reports on corporate issuers of high-yield, non-investment grade debt. In-depth studies were carried out on European listed companies and more detailed comparisons were made of global investment options. The catalogue of equity and bond market strategy reports was broadened to include research into Spanish regional governments issuing debt securities on the capital markets.

The Bank's research unit earned a number of accolades and distinctions. In a survey of Spanish investment research firms in 2014, Thomson Reuters' investment analysis arm, StarMine, named Banco Sabadell’s research team Best Industry Earnings Estimator in the materials category. This corroborates the Spanish industry rankings given to the Bank's research department (placed second in 2013 and third in 2010) for the accuracy of its recommendations.

Product

The year 2014 was marked by low economic growth and return forecasts were inevitably very modest; for this reason, expert management and careful risk control were of vital importance. Against this background, the Investment Product and Customer Strategy department followed its asset allocation strategy as a conceptual framework to shape its investment approach, the planning of its investment product offering, and the work done to analyse and research markets and investment opportunities contributed to anticipating market trends and making the most favourable selections in terms of expected risk and return.

Investment Management

Following the mergers of Banco Gallego and Lloyds España in the first quarter of 2014, the Banco Sabadell Group's investment management companies ended the year with €9,952.6 million in assets under management in Spanish-domiciled mutual funds, 59.1% more than at 2013 year-end and far in excess of the 26.7% growth rate of the industry as a whole. With this volume of assets under management, the Group's fund manager, Sabadell Inversión, ranked fourth among Spanish-domiciled fund managers.

Banco Sabadell mutual funds earned some outstanding accolades. Sabadell Rendimiento, fi was honoured with the award for Best Fund in the fixed Income category – Money market by the Spanish business daily Expansión. The British publishing group Citywire paid tribute to the performance of six fixed-income and equity fund managers at Sabadell Inversión, based on a study of fund returns over the last three years. Three fixed-income managers were awarded AA ratings and three equity fund managers were given A+ ratings. finally, in the 2014 mutual fund portfolio performance rankings organized each year by Expansión, Sabadell Inversión won a distinguished position with its portfolios being given first place in the aggressive category, having produced an annual return of 14.5% over the year 2014, and second place in the conservative category, with an annual return of 6.6%. A total of 16 fund management companies participated in the rankings, which included some of the best Spanish fund managers as well as some outstanding international firms.

For the Investment, Products and Research department, the primary objective is to maintain the high success rate achieved in its research-based recommendations on equity shares of European listed companies and on government and corporate debt.

T5 Spanish-domiciled mutual funds

Treasury and Capital Markets

In 2014, the European Central Bank reduced official interest rates to lowest-ever levels, where they remain, and this impacted and shaped large areas of the operating environment, business opportunities and the functioning of the financial markets.

Despite this, the stirrings of economic recovery, helped by strong exports, and the focus on implementation of business development actions and campaigns for Treasury and Capital Markets envisaged in the “Triple” business plan, made it possible to achieve the targets set for this year.

The Bank reaffirmed its presence in the capital markets, with levels of demand that are a tribute to its capacity and position in the market. The Bank participated actively in a €1.6 billion issue of 10-year debt by the Communityof Madrid and also in high-yield issues for a total nominal value of €1.62 billion.

The Bank is a member and registered advisor of Spain's Alternative fixed-Income Market (Spanish initials: MARF), where it originated and coordinated two new bond issues, by Tecnocom and Grupo Ortíz, with nominal values of €35 million and €50 million respectively, and participated in a €20 million commercial paper programme for Copasa.

In the area of sales and marketing, the Bank ran a campaign directed at some 4,000 customers with the aim of increasing foreign exchange transaction activity, which resulted in a 78% increase in the inventory of structured products to reach a record high. In the campaign to expand the international customer base, planned actions gained more than 200 new customers in 17 countries. In the Bank's trading and related processes, the aim was to meet liquidity management requirements and also to take a proactive approach to the management of the fixed-income portfolio and the sizeable currency trading business generated by orders from customers.

Key action areas for 2015 will be to complete the rollout and implementation of current initiatives to increase product sales, product rotation and transaction volumes.

Securities Trading and Custodian Services

2014 was a year of volume growth in equity trading, which a≠ected all sectors of the market and saw a recovery, to some degree, in trading and custodian services for non-resident institutional clients, which had fallen to very low levels in recent years. This meant increased business for global, rather than local, brokers.

The Bank was able to retain its position as the second-largest broker in the market (according to the market management company’s report on trading volumes per member) with its share of market trading increasing to 10%, slightly higher than in 2013.

During the year the Bank carried out a number of actions to boost its position in the retail market; these included the launch of Sabadell eBolsa with the aim of obtaining full portfolio management mandates from new and existing customers, capturing investment portfolios and thus being able to offer customers a high standard of service and support throughout the life of the investment at the best price available in the marketplace.

To further this aim, it is intended that the initiatives set out in the “Triple” business plan should be brought forward, especially those related to new product launches.

T6 Securities trading
(market volumes)