- Sabadell has been mentioned as a potential target for both BBVA and Santander, and Sabadell would give either significant cost-cutting and corporate-lending leverage in Spain.
- On its own, Sabadell is going to struggle a while longer due to weak rates and a still-too-high expense structure in both its Spanish and UK operations.
- Non-performing loan levels remain elevated, but the bank's reserves and capital look healthy and the bank can readily absorb 300bp or more of full-cycle losses.
- A buyout would likely be the best option for Sabadell management and shareholders, and could come at a meaningful premium to today's price, but the shares also trade below long-term standalone value.
For further details see:
Banco de Sabadell Dogged By Weak Earnings And A Heavily Discounted Valuation