Presentation (24.87 Mb, 55 pp)

BANCO SABADELL STRATEGY
Southern European Banks
Juan Mª Nin Génova
Director and General Manager
Banco Sabadell
1 April 2004
STRATEGY FOR PROFITABLE GROWTH
ACQUISITION OF BANCO ATLÁNTICO
FUTURE BUSINESS PLAN 2005-2007
CONCLUSIONS
2
STRATEGY FOR PROFITABLE GROWTH
Profitable growth in Banco Sabadell
GROWTH
PROFITABILITY
versus
PROFITABLE
PROFITABLE
GROWTH
GROWTH
ORGANIC GROWTH
+
ACQUISITIONS
3
STRATEGY FOR PROFITABLE GROWTH
The combination is the key to profitable growth above
the level of market growth
244
1.672
245
1.183
CAGR 1997 – 2002
Banco Sabadell:
7,15%
Spanish banks:
6,83%
1997
Growth through
acquisitions (BH)
Organic growth
2002
Organic growth is rewarded by the market and increases the
valuation of the non-organic expansion.
Copyright © 2003 Mercer Oliver Wyman
4
STRATEGY FOR PROFITABLE GROWTH
Acquisitions at Banco Sabadell
q Always of key banks in order to increase shareholder value.
q Recent Banco Sabadell acquisitions:
ü In 1996: Natwest España
ü In 2001: Banco Herrero
ü In 2003: Banco Sabadell
Banco Natwest España
1996
2001
2003
5
STRATEGY FOR PROFITABLE GROWTH
Management of acquisitions at Banco Sabadell
Natwest España renamed
Solbank
Acquisition of
Natwest España
1996
Acquisition of
Banco Herrero
Bid approved
Legal merger of Banco for Banco
Herrero into Banco
Atlántico
Sabadell
IT system integration of
Banco Asturias and Solbank
1997
Decision to integrate
Natwest España into Banco
Sabadell
1998
1999
IT system integration of
Banco Herrero
2000
2001
2002
2003
IT system
Acquisition of the
integration of
remaining part of
Activobank
Activobank
Legal merger of Solbank
into Banco Sabadell
Legal merger of
B.Asturias into
B.Sabadell
Start of the implementation of
the new IT platform
Sound experience in integrations
+
New IT platform
6
STRATEGY FOR PROFITABLE GROWTH
Organic growth in Banco Sabadell
The business organisation and management required to achieve
strong organic growth are defined in three-yearly business plans.
Three-yearly business plans
Objectives
Projects
Monitoring
Growth and Consolidation
2002
2003
2004
New Business Plan
2005
2006
2007
7
STRATEGY FOR PROFITABLE GROWTH
Growth and consolidation
2002: A year of major strategic decisions.
Q1 02
Q2 02
BUSINESS PLAN
(2002-2004)
Q3 02
RISK
MANAGEMENT
(2002-2004)
Q4 02
COST
MANAGEMENT
(2003-2005)
Main projects defined
§ Merger B.Asturias and B.Herrero
§ Incorporation of Activobank
§ New IT platform
§ Quality plan
§ Efficiency plan
§ Capital allocation to business units
§ M.I.S.
§ Renewal of Group Websites
§ New design for Branches
§ CRM project
8
STRATEGY FOR PROFITABLE GROWTH
Growth and consolidation
2003: A year for executing the strategic decisions taken
in 2002.
Q1 03
Implementation
RAROC in
companies
Q2 03
IT system
integration of
Banco Herrero
Q3 03
Value metrics
Integration
of Activobank
Q4 03
Integration of
BS, BH and
BA networks
Bid approved
for B.Atlántico
Renovation of
branch Lay-outs
Renewal of Websites
Risk integration model for
global managment
80% of the
new platform
9
STRATEGY FOR PROFITABLE GROWTH
Growth and Consolidation
2004: A year of culmination of decisions taken in 2002
and of the integration of Banco Atlántico.
Q1 04
Integration plan for
Banco Atlántico
Capital increase
Q2 04
Q3 04
Q4 04
Definition of new Business
Plan (2005 – 2007)
+ Quality plan
+ Efficiency plan
+ Full implementation of IT system platform
10
STRATEGY FOR PROFITABLE GROWTH
Organization of Business Units
CUSTOMER
CUSTOMER
TRANSVERSE
TRANSVERSE
SUBSIDIARIES
SUBSIDIARIES
JOINTVENTURES
VENTURES
JOINT
BE B,Sabadell
Bancassurance
Real estate
BS Andorra
BE B,Herrero
Asset management
Development capital
Managerland
BC B,Sabadell
Ibersecurities
Americas
Netfocus
BC B,Herrero
Treasury customers
BS Fincom
BC Solbank
BC Activobank
SBP Privada
Ø Model of a universal bank with medium/long term growth via
a customer banking model.
Ø Multi-brand and multi-channel with excellent service and risk
Dexia Sabadell
quality.
Ø Business plan for 2002-2004
ROE
Cost/income ratio
11
STRATEGY FOR PROFITABLE GROWTH
Multi-brand strategy
ASTURIAS
LEÓN
A CORUÑA
ZARAGOZA
BARCELONA
MADRID
VALENCIA
BALEARIC
ISLANDS
ANDALUCIA
Online Banking
NETWORK
30/12/02
31/12/03
Banco Sabadell
542
583
Banco Sabadell (SME)
Solbank
B.Herrero + B.Asturias
1
60
299
5
74
202
6
0
6
2
274
908
1146
Sabadell Banca Privada
Activobank
Banco Atlántico
TOTAL
Public sector services and finance
STRATEGY FOR PROFITABLE GROWTH
Multi-channel strategy
q Internet banking
Individuals
327.050
360.643
83.994
65.444
275.715
2001
Companies
48.376
2002
2003
AQMETRIX: The best portal for individual
customers in terms of service availability.
q ATMs installed
2001
2002
2003
AQMETRIX:
The corporate portal with
the best browser facilities and design.
q Issued Cards
Debit
Dec-03
620.653
Credit
469.853
Dec.03
1.111
Revolving
74.946
13
STRATEGY FOR PROFITABLE GROWTH
Main projects defined and implemented in the 2002–04
business plan:
IMPROVED
WEBSITES
NEW
IT
QUALITY
PLAN
BASILEA
II
EFFICIENCY
PLAN
CRM
RAROC &
CUSTOMER
VALUE
NEW
LAY-OUTS
14
QUALITY PLAN
OBJECTIVE:
To bring added value to our business proposal
and to publicise/make public our commitment
to quality through obtaining the ISO 9001
certification for the whole organisation.
ACTION PLAN 2002 – 2005:
q 2002: Strengthen our quality culture.
q 2003: Consolidate habits, focus on Customer / business unit.
q 2004: Create a single corporate quality model.
q 2005: Final implementation and global certification throughout
the bank.
15
BASILEA II
OBJECTIVE:
q To gain a competitive advantage by relying on internal systems
for measuring risk.
q To comply with the strictest supervisory rules that will enable us
to use our own internal estimates for the alignment of Capital with
the key elements of banking risks.
Pillar I
Market
discipline
Review of
supervisory
process
Minimum capital
requirements
BASILEA II
Excellent Risk Quality:
IRB ADVANCED
(Internal ratings based advanced approach)
Pillar II
Pillar III
16
2002 – 2005 EFFICIENCY PLAN
-44,7
TECHNOLOGY:
€ m 667,1
589,5
286,2
205,4
599,6
622,4
ü Accelerated amortization of the
new IT systems platform.
212,6
223,8
ü Elimination of the redundant
platforms.
380,9
378,4
385,5
398,6
2002
2003
2004e
2005e
Personal expenses
ü Integration of IT systems for
several business units (scale
economies): Banco Herrero,
Activobank.
General expenses
FIT@ PROGRAMME:
ü Improvement in staff costs through greater efficiency in processes.
REMAINING OPERATIONS:
üBanco Herrero integration (non-technological costs).
üActivobank integration (non-technological costs).
ü Remaining non-recurring expenses.
17
NEW IT PLATFORM
Old platform
New Platform
Transactionorientated
platform
Client-orientated
platform
MAIN
TECHNOLOGICAL
ADVANTAGES
State-of-the-art
CRM capabilities
üIntegrated system
üModuled system
üAdapted to the multi-channel strategy
üContinuous system
üIntegrated accounting flow and management
Banco Sabadell has devoted €96 million to develop the totally new IT platform.
At 2003 year-end about 90% of the project had been executed.
18
RAROC AND CUSTOMER VALUE
Main advantages of these metrics:
Ø They reflect the operating profit and estimated risk costs.
Ø They use economic capital, not regulatory capital.
Ø Aligned with the creation of shareholder value.
Applications of these metrics
Segmentation
Pricing/ Design of products
Inclusion in
management
information
Direct marketing
Value
Optimisation of capital
and active management
of portfolio
Planning based on value
Redesign of processes
Management of distribution network
19
CRM PROJECT
Definition, design and implementation of systems and tools which help
business units to manage business relations with their Customers that
are both long-lasting and profitable.
BUSINESS
INTELLIGENCE
Transformation of corporate data
systems into valid information for
decision making.
Propensity scoring
Behaviour models and
patterns
Campaign management
AUTOMATED
MARKETING
Process management.
Channel integration
AUTOMATED
SALES FORCE
Back up support for planning
commercial operations
Commercial.
Commercial Agenda
Parametrical selections
INTERACTION
WITH CUSTOMER
Back up support for sales and
Customer care processes.
Personal file
Marketing encyclopaedia
MONITORING
To provide system feedback on
the look out for improvements.
20
RENEWAL WEBSITES
Renewal of the Group websites:
üSolbank
üBanco Herrero
üBanco Sabadell
üActivoBank
üSabadell B.Privada
Best Spanish website among
quoted companies
The analysis revealed that the Banco
Sabadell website is the one that best
complies with the standards laid down by
the Law of Transparency.
Analysis carried out by the
Consultancy company Look &
Enter for the newspaper El País
21
NEW LAY-OUT BRANCHES
Branch layouts updated and
adapted to present day
requirements
Main advantages:
üOpening up of business areas
üAccess barriers reduced
22
STRATEGY FOR PROFITABLE GROWTH: RESULTS
Excellence in Risk Management
Solid Growth Organically and Through Acquisitions.
25.000
4,5
Acquisition
of Banco Herrero
222,1
4
20.000
3,5
CAGR 95–03: 17,8%
3
200,0
15.000
2,5
10.000
Acquisition of
Natwest Spain
176,2
2
117,1
1,5
105,7
1
5.000
84,4
114,6
112,0
0,5
100,9
0
0
1995
1996
1997
Customer
Loans
1998
1999
2000
NPL Ratio
2001
2002
2003
NPL (€mm)
23
STRATEGY FOR PROFITABLE GROWTH: RESULTS
Excellence in Service Management
€ in millions
2002
2003
Total assets
27.224,2
30.511,6
12,1%
Gross loans to customers
21.382,7
24.935,8
16,6%
On-balance sheet customer funds
20.954,7
24.423,7
16,6%
8.280,7
9.006,4
8,8%
714,4
759,9
6,4%
1.008,1
1.103,0
9,4%
Net operating income
292,0
468,1
60,3%
Profit before tax
260,3
370,6
42,4%
Profit attributable to the group
220,4
234,9
6,6%
Financial Highlights
AUM (off balance sheet items) (1)
Net interest income
Gross operating income
(1) Mutual funds, pension funds and technical reserves
03 / 02
24
STRATEGY FOR PROFITABLE GROWTH
ACQUISITION OF BANCO ATLÁNTICO
FUTURE BUSINESS PLAN 2005-2007
CONCLUSIONS
25
ACQUISITION OF BANCO ATLÁNTICO
Banco Atlántico constitutes an
excellent opportunity for
development and completes the
2002-2004 business plan
ü Eighth most important banking group in
Spain.
üConsolidated franchise and high brand
recognition.
ü National branch network with a strong
presence in the wealthiest regions of Spain.
ü Loyal, under-penetrated customer base.
ü Historical growth below sector average.
ü Limited international presence.
26
CONTRIBUTION OF BANCO ATLÁNTICO TO THE GROUP
M€
31/12/2003
Atlántico /
Sabadell
Financial Highlights
B.Sabadell
Loans to customers (net)
(2)
Customer funds
23.757
24.424
5.911
6.371
24,9%
26,1%
760
468
235
205
95
42
26,9%
20,3%
17,7%
52,9%
138,2%
0,40%
6,7%
65,6%
98,8%
1,09%
9,6%
872
7.545
274
2.698
Net interest income
Gross operating income
Net attributable profit
Cost/income ratio
Loans / deposits
Loan loss ratio
Core tier 1 ratio
(3)
Domestic branches
Employees
B.Atlántico (1)
31,4%
35,8%
(1) Based on preliminary,non-audited data.
(2) On-balance sheet customer funds.
(3) Operational expenses (excl. depreciation)/gross operating income
27
CONTRIBUTION OF BANCO ATLÁNTICO TO THE GROUP
Platform for further growth
Consolidation as the fourth
largest banking group in Spain
Geographical
equilibrium in terms
of business and
branch network
Increase in market
share of customer
targeted market
Maintain low risk domestic retail
and SME banking profile
28
CONTRIBUTION OF BANCO ATLÁNTICO TO THE GROUP
Strengthened Position as Fourth Largest Spanish Banking Group
€ bn
30/09/03
Domestic customer loans
Domestic customer deposits
Domestic branches (1)
4.343
96,8
75,6
+23%
96,4
3.347
+28%
67,2
+31%
2.132
BTO
BTO
37,4
27,1
22,8
BTO
12,3
15,4
BBVA
SAN
POP
SAB
1.146
19,9
287
BKT
SAN
BBVA
Domestic mutual funds
POP
SAB
BKT
SAN
BBVA
POP
SAB
BKT
Domestic bancassurance (tech, reserves)
53,6
+41%
35,3
BTO
SAN
BBVA
6,9
6,5
6,1
POP
BKT
SAB
19,1
13,3
BTO
BBVA
SAN
+15%
4,2
SAB
3,1
1,3
POP
BKT
Note: Data of Spanish activities only; Banesto (“BTO”) data for domestic customer loans (€ 28.9 bn), domestic customer deposits (€ 20.9 bn), domestic branches (1,683),
domestic mutual funds (€ 10.0 bn) and domestic bancassurance (€ 1.9 bn)
(1) Branches of Sabadell and Banco Atlántico as of 31/12/03. Includes approx. 70 branches targeted to be closed (see page 58 for details)
Source: Sabadell, interim reports, Inverco, Icea
29
CONTRIBUTION OF BANCO ATLÁNTICO TO THE GROUP
Increase in market share of customer targeted market
Deposits
%
6
6
,
+0
Loans
3,08%
2,42%
BS
2,88%
Nuevo BS
BS
2%
6
,
0
+
3,50%
Nuevo BS
Resident sector
Resident sector
The acquisition of Banco Atlántico helps to increase
customers especially in the target segments of the Group:
ü Affluents and Private Banking
ü SME’s
ü Solbank
30
CONTRIBUTION OF BANCO ATLÁNTICO TO THE GROUP
Maintain low risk domestic retail and SME banking profile
BANCO SABADELL
BANCO ATLÁNTICO
Public
Non-resident administrations
Sector
5,1%
94,7%
Non-resident
Public
Sector
administrations
0,2%
16,2%
+
Resident
Sector
(1)
0,7%
Resident
Sector
83,1%
NEW SABADELL (2)
Non-resident
Sector
7,3%
31/12/03
(1) Based on preliminary and unaudited data
(2) Including Banco Atlántico; Banco Atlántico data based on
preliminary and unaudited data
Note: Consolidated customer loans as of 31/12/03
Public
Administrations
0,3%
Resident
Sector
92,4%
31
CONTRIBUTION OF BANCO ATLÁNTICO TO THE GROUP
Increasing Geographical Balance
New Banco Sabadell (1)
Banco Sabadell
170
4
22
48
6
2
3
29
173
321
7
20
10
6
61
363
22
11
108
76
3
1
148
31
9
4
6
41
19
111
Total: 872 branches
28
41
103
11
Total: 1.146 branches
The acquisition of Banco Atlántico has rebalanced Banco Sabadell’s
geographical presence in Spain in terms of its distribution network.
(1) Including Banco Atlántico’s branches. Includes approx.70 branches targeted to be closed
32
CONTRIBUTION OF BANCO ATLÁNTICO TO THE GROUP
Banco Atlántico's Integration Pillars
Domestic
business
• Targeted net
closure of 70
branches
• Nation-wide
expansion plan
• Integration of
selected
specialised
subsidiaries
• Integration of
selected backoffice / head
office functions
Risk
management
• Roll-out of
Banco
Sabadell’s
control /
compliance
practices
IT platform
International
business
• Scope to
leverage IT
platform and
integration
expertise
• Strengthen
business
through Banco
Sabadell’s
expertise
• Creation of
supervisory
body for public
tender offer
interim period
Targeted pre-tax synergies of €114mm by 2006
33
ANALYSIS OF ESTIMATED SYNERGIES
Estimated synergies of 114 M euros before tax in 2006
€ 114 mm
120
15
100
€ mm
80
74
60
60
(1)
40
20
0
41
Domestic International
business
business
Income synergies
(net of business losses)
40
Branches /
Central services
IT
Total
Cost synergies
(net of integration costs)
34
FINANCING THE ACQUISITION OF BANCO ATLÁNTICO
A capital increase of 1300 M€ has been carried out to
finance part of the acquisition of Banco Atlántico and to
re-establish the pre-acquisition capital ratio objectives.
üThis transaction also helped to improve
Capital
increase
completed
share liquidity.
üThe average monthly volume of shares
1748
traded has risen significantly.
Development of Banco Sabadell’s
volume of traded shares
Announcement of
acquisition of
Banco Atlántico
232
219
57
59
ene-03 feb-03
105
mar-03
186
139
82
abr-03
82
82
may-03 jun-03
* Thousands of shares, monthy average
63
jul-03
55
ago-03 sep-03
359
oct-03
107
nov-03
dic-03
ene-04
feb-04
mar-04
35
CAPITAL INCREASE
Outstanding features of the Capital Increase:
ü An important transaction.
ü A “quasi – IPO” transaction.
ü With a totally new structure.
ü Completed in a very short period of time.
ü With an exhaustive marketing programme.
ü Resulting in a high demand.
ü With an extremely positive subsequent market reaction.
36
CAPITAL INCREASE
With an innovative structure for a capital increase ...
Simultaneously :
q 1/2 the Capital Increase via a Rights Issue tranche, mainly
for existing Banco Sabadell shareholders.
q 1/2 the Capital Increase via non pre-emptive basis
(“bookbuild”) aimed at international institutional investors
(76%) (including placements to US QIBS under Rule 144A) and
Spanish investors (24%).
in efect was a
“quasi-IPO”
transaction ...
SHAREHOLDERS
552,34 M
INSTITUTIONAL
INVESTORS
752,25 M
CAPITAL
INCREASE
37
CAPITAL INCREASE
Transaction structure summary:
Rights issue
New shares in issue
51.000.684 new shares (pari passu)
Subscription ratio
1 new share for every existing 4
Subscription price
€10,83
TERP
€15,60 (based on a €16,79 spot, as of February 13)
Discount to TERP
30,6% (based on a €16,79 spot, as of February 13)
Offer size
€552,34 M
Preferential subscription
period
15 days (14 - 28 February)
Rights trading period
16 – 27 February
“Second round”
No “second round” for subscribing shareholders.
Rump to be placed.
Underwriting
Major shareholders, La Caixa (holding 15% of company) and BCP
(8,5%) committed to subscribe 100% of the new shares for which
they have subscription rights.
Remaining shares were underwritten by a syndicate of banks.
€ 552,34 M
38
CAPITAL INCREASE
Summary transaction structure:
Bookbuilt offering waiving pre-emptive rights
New shares in issue
Up to 46.000.000 shares (excl. greenshoe) (pari passu)
Greenshoe option
Up to 5.000.000 shares (10,8% of max. bookbuilt base offering)
Offer price
Set on March 1st with reference to the book of demand at €14,75
TERP
€15,60 (based on a €16,79 spot as of February 13)
Offer size
€752,25 mm (including greenshoe)
Initial Offer structure
Institutional offering comprising of:
A domestic institutional offering with an initial size of around 15%
An international institutional offering with an initial size of at least
85% of the bookbuilt, including Rule 144A placement to US QIBs
Final offer structure
Domestic institutional offering: 4,3 M shares (8,4%)
La Caixa 6,9 M shares (13,5%)
International institutional offering: 34,8 M (68,2%)
Greenshoe: 5,0 M shares (9,9%)
€ 752,25 M
39
CAPITAL INCREASE
Completed in a very short period of time
29-1-2004
10-2-2004
EGM and announcement Folleto
of transaction
aproval by
18
22-12-2003
Announcement Sabadell
won B.Atlántico auction
process
CNMV
26-1-2004
Publication of
2003 results
14-2-2004
Printing of IOM
Share Price
17
8-1-2004
Kick-off for
Capital Increase
1-3-2004
Pricing
16
30-1-2004
“Comunicación
Previa” to CNMV
Analysts
presentation
Initial Contacts with
La Caixa and BCP
15
22/12/03
29/12/03
5/1/04
12/1/04
19/1/04
26/1/04
2/2/04
9/2/04
16/2/04
23/2/04
1/3/04
Completed in 7 weeks (Rule 144A).
40
CAPITAL INCREASE
An exhaustive marketing programme
2 teams during 2 weeks.
Roadshows
15 financial markets visited in Europe and the
United States, over 100 investors visited.
Edinburgh
Dublin
Amsterdam
Boston
London
Frankfurt
Paris
San Francisco
New York
Zurich
Milan
Madrid
Lisbon
San Diego
Barcelona
ü 69 one–on–ones.
ü 94 investors contacted.
ü 23 one–on–ones.
ü 38 investors contacted.
41
CAPITAL INCREASE
Resulting in a high demand
Geographical breakdown
ü 100% of the rights
ü High demand from
Italy
France 3%
4%
Switzerland
6%
institutional investors (5,5x
subscribed increase).
ü Practically half of the
Germany
6%
Netherlands
10%
demand came from the UK.
Other
10%
UK
46%
US
15%
1,4
No rump placed
with syndicate
1,3
1,2
Rights price:
a positive performance
1,1
1
16-2
17-2
18-2
19-2
20-2
21-2
22-2
23-2
24-2
25-2
26-2
27-2
42
CAPITAL INCREASE
With an extremely positive subsequent market reaction.
+ 7,86%
15,91 €
14,75 €
Pricing 1/3/2004
On the first day of operations,
the price rose to virtually 8%
above the price at the close of
the institutional tranche.
Close 2/3/2004
16,5
16
15,5
15
14,5
14
2/3/04
4/3/04
6/3/04
8/3/04
10/3/04 12/3/04 14/3/04 16/3/04 18/3/04 20/3/04 22/3/04
43
CAPITAL INCREASE
Result of the operation
q 50% more outstanding shares.
q 7 new analysts initiate coverage, bringing the total to 19.
q + 350 new institutional investors.
q Market capitalisation: ≈ € 4,9 bn.
Change in shareholder situation:
31/12/2003
Other
shareholders
71,2%
La Caixa
15%
Other
shareholders
BCP
56,9%
8,5%
Other institutional
investors
5,3%
9/3/2004
La Caixa
14,8%
Millenium
BCP
7,1%
Other institutional
investors
21,2%
44
CAPITAL INCREASE
Public recognition of the execution of the operation.
45
STRATEGY FOR PROFITABLE GROWTH
ACQUISITION OF BANCO ATLÁNTICO
FUTURE BUSINESS PLAN 2005-2007
CONCLUSIONS
46
VALUE-BASED PLANNING
q For management purposes
Ø ROE: Capital allocated to each business unit.
KEY
ELEMENTS
Ø EFFICIENCY RATIO: Direct and indirect costs
attributed to each business unit.
q For value creation purposes
Ø ORGANIC: Generation of income.
GROWTH
Ø ACQUISITIONS
1º Costs management
2º Income mangement
Capacity to reinvest the income in the business itself in
a strong competitive market position.
Ø CAPITAL EMPLOYED
BALANCE
MANAGEMENT
Ø FINANCIAL STRUCTURE
Access to capitals
markets
Customer deposits
Ø INVESTMENTS: Identification and management of
businesses, especially if they destroy value.
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VALUE-BASED PLANNING
Business plan for next three years
Process of development and planning of growth strategies.
1,Scan
Scanof
ofopportunities
opportunitiesfor
forincome
incomegrowth
growthand
and
1,
analysisof
ofgrowth
growth“budget”
“budget”
analysis
2,Integrated
IntegratedPlan
Plan
2,
forthe
theGroup
Groupand
and
for
forthe
theBusiness
Business
for
Units
Units
Operatingplans
plans
Operating
Copyright © 2003 Mercer Oliver Wyman
Initiativeplans
plans
Initiative
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VALUE-BASED PLANNING
1. Scan of opportunities for income growth
Ø The next business plan must identify the key growth opportunities and
how to make the most of them.
Commercial
Banking
Business
Banking
SBP
Product 1
Product 2
Product 3
...
Ø It has to ensure a sustainable difference with respect to the
competition.
Ø And it has to develop the infrastructures to support growth (new CRM
applications, RAROC simulators, value metric, etc.) .
Copyright © 2003 Mercer Oliver Wyman
49
VALUE-BASED PLANNING
2. Integrated plan for the Group and the Business Units
Planning based on value creation:
q Assigning of greater capital to businesses with greater growth
prospects (RAROC > Capital Costs).
q Management to correct those businesses with lower returns than
Capital Costs.
Cost of
Capital
Partly-Owned
Companies
Transverse
Growth Rate
Current earnings
position adjusted to
risk vs growth
Diversified
Size of the circle indicates
the Financial Capital
Solbank
BS Commercial
Banking
BS Corporate Banking
Banco Herrero
RAROC
SBP
Copyright © 2003 Mercer Oliver Wyman
50
VALUE-BASED PLANNING
Implementation of business plan for the next 3 years
Ø The maximisation of growth has to combine suitable positioning with
excellent execution.
Level of
of growth
growth
Level
Positioning
Positioning
Quality of
of execution
execution
Quality
Ø Above average peformance.
Ø Growth record determined by market
segments.
Ø Requires a strong “capitalist”
culture.
Ø Market growth can be affected by
innovation.
Ø Volatile if viewed on a granular level, it
is normally cyclical.
Focus on major growth
business lines
Copyright © 2003 Mercer Oliver Wyman
+
Ø Wide range observed in any
segment of the market.
Above market growth in
chosen business
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STRATEGY FOR PROFITABLE GROWTH
ACQUISITION OF DE BANCO ATLÁNTICO
FUTURE BUSINESS PLAN 2005-2007
CONCLUSIONS
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MAIN CONCLUSIONS
q Banco Sabadell is committed to the combination of
organic growth and acquisitions in order to obtain
profitable growth.
q Our recent past history has shown us that this business
strategy has helped to increase shareholder value.
q Within the framework of the 2002-04 business plan, a
sound business organisation was designed, a multibrand, multi-channel strategy was adopted, different
projects were defined and are now being implemented,
This guarantees a high degree of organic growth for us
and makes it viable to complement this organic growth
with acquisitions.
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MAIN CONCLUSIONS
q The acquisition of Banco Atlántico has consolidated
Banco Sabadell’s position as the fourth largest banking
group in Spain and represents a platform for greater
future growth.
q In order to finance the acquisition of Banco Atlántico a
capital increase has been carried out.
q The creation of value will be the basis of our future
business plan and for that, value metrics and RAROC will
be important elements of decision.
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