The CEO of Sabadell, Marc Armengol, has supported that financial entities can resort to selective acquisitions, as long as these operations remain outside the three large Spanish banks --Santander, BBVA, and Caixabank-- in order to protect competition in the national banking system.
In his speech, the CEO of Sabadell recalled that banking continues to be "a business of scale," an activity that requires assuming increasing fixed costs. Therefore, he considered it logical to gain size through purchases when the objective is consolidation.
However, the executive clarified at an event organized by the business school IESE and FTI Consulting that future corporate operations in Spain should not feature the three large groups as protagonists, as "they are already too large and would surely affect the health of competition in the country."
At the same time, he stressed that currently all entities are developing "healthy" solo projects, creating value for shareholders and occupying a positioning that, in his opinion, makes "a lot of sense" within the banking landscape.
In this scenario, Armengol admitted that "surely on paper it would make sense --to carry out corporate operations--," although he pointed out that, in the short term, he does not foresee "anything" relevant happening in this area.
The executive specified that, if Sabadell decides to explore new opportunities in the market, the target entity must "compete and provide better functionalities to customers." Along these lines, he indicated that operations could focus on 'startups' that respond to specific user needs.
Maintains the objectives of the 2025-2027 strategic plan
On the other hand, the CEO assured that the current geopolitical context will not alter the fulfillment of the goals set in the bank's 2025-2027 strategic plan.
"We are coming from growth levels of approximately 6% in credit, and another 6% in deposits year over year. With contained expense delivery. With a cost of risk that continues to improve and is below, and with a return on tangible equity (RoTE) that points towards reaching the 16% we have committed to. Therefore, we have every confidence in the world that we will achieve it," he asserted.
In relation to the international environment, the highest responsible of the Vallès bank has identified three avenues of potential impact on the entity. The first is linked to the shift in the European Central Bank's (ECB) interest rate policy to contain the rise in inflation generated by the increase in energy prices.
In particular, the former TSB CEO has confirmed that an increase in rates "would help the bank in the short term to improve its interest margins".
As a second effect, but in the opposite direction, he has anticipated a possible moderation of economic activity that could lead many companies to slow down or postpone investment projects. The third impact, more in the medium term, would have to do with customers' repayment capacity.
Sale of TSB and concentration on business in Spain
Regarding the sale of TSB to Santander for 3.3 billion euros, Armengol explained that one of the determining factors was that Sabadell had already reached the reasonable limit of investment in its British subsidiary. Furthermore, he stressed that the operation responds to the intention of the Vallès bank to reinforce its focus on the Spanish market.
"TSB in that history of growth and of giving value to customers, surely to take the next step, needed a scale and an investment capacity that the new buyer can provide," he reiterated.
With the focus now on Spain, the CEO has announced that the entity will raise the quality of customer service to sustain its competitiveness and ensure that its users find an offer at Sabadell comparable to that of new digital players.
In this regard, he has argued that the bank must take a "leap" to more decisively reinforce its relationship banking vocation.
"Sabadell will continue to be a branch bank"
Regarding the implementation of Artificial Intelligence (AI), the executive has acknowledged that it will transform three major areas of the business: customer interaction; the way internal processes are executed, as it will change the treatment of information; and decision-making itself.
"A bank is nothing more than a decision-making machine, many, many decisions. It is in our business 'core' to decide whether to grant credit or not, or whether to let a payment pass or not because we think it is fraudulent, it has a threat of incorporating elements of money laundering, etc. If we think about the scope of the information we use, AI can help a lot," the official pointed out when referring to this last point.
Regarding the implications for employment and the physical network, Armengol insisted that offices "do not have an expiration date." "At the moment of making decisions as a client, you need someone to hold your hand and accompany you in that step. And, at least, as far as I can see, in the medium term Banco Sabadell will continue to be a bank with offices, with proximity to the territory," he concluded.