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Banco Sabadell: From Wool Town Cooperative to Spain's Takeover Target
I. Introduction & Episode Roadmap
On October 17, 2025, the Spanish National Securities Market Commission (CNMV) delivered a verdict that would echo through the corridors of European banking: the CNMV confirmed that "the public offering has had a negative outcome." Investors tendered just 25.47% of Sabadell's voting rights, far short of the 50% BBVA needed for victory—or even the 30% threshold that would have permitted a second attempt. After 18 months of corporate warfare, political maneuvering, and more plot twists than a telenovela, Banco Sabadell had survived one of the most contentious hostile takeover attempts in European banking history.
But how did we get here? How did a 144-year-old bank born from the wool merchants of a Catalan factory town transform into Spain's most contested financial institution—a €17 billion battleground where the futures of two national champions hung in the balance?
Banco de Sabadell, S.A. is a Spanish multinational financial services company headquartered in Sabadell, Catalonia. It is the 4th-largest Spanish banking group. It is a universal bank and specialises in serving small and medium enterprises (SMEs) and the affluent with a bias towards international trade. These dry facts obscure a far more compelling story: a bank that was founded as a cooperative by 127 wool merchants on the last day of 1881, survived two world wars (one of which ripped Spain apart), navigated a catastrophic IT failure that locked 1.9 million customers out of their accounts, and ultimately told one of Europe's largest banking groups to take a hike.
The central question is deceptively simple: How does a small local bank transform through crisis opportunism, survive corporate near-death experiences, and ultimately become valuable enough to attract—and repel—a €17 billion hostile bid?
The story unfolds across five distinct inflection points: the opportunistic acquisitions during Spain's banking crisis that tripled the bank's size, the ambitious TSB acquisition that took Sabadell international, the 2018 IT disaster that nearly destroyed that investment, the political crisis that forced headquarters to flee Catalonia, and the hostile takeover battle that tested whether independent banking still had a future in consolidating Europe.
II. Founding Context: The Wool Town Bank (1881-1907)
The Setting: Industrial Catalonia
The year is 1881. In the Catalan city of Sabadell, thirty kilometers north of Barcelona, steam engines are transforming a medieval textile center into one of Spain's industrial powerhouses. At the end of the 19th century, the city of Sabadell was known as a bustling "factory city" with approximately 18,000 residents, 4,000 of whom were employed in the wool industry. Together with the nearby city of Terrassa, Sabadell accounted for 66% of Spain's wool production. Mechanization processes, introduced from 1875 onwards, led to significant productivity increases—doubling output in some steam-powered factories.
Picture the scene: factory chimneys punctuating the skyline, the rhythmic clatter of looms echoing through stone streets, merchants haggling over bales of wool imported from Argentina and Australia. The industrialists of Sabadell had capital—their mechanized factories were printing money. But they had a problem.
This newfound efficiency enabled local industrialists to accumulate capital, leading some to begin informally lending money among themselves. Over time, these industrialists specialized in financial operations, but no institution offered the long-term credit necessary for purchasing raw materials, such as wool imported from Argentina or Australia. This unmet need spurred the idea of creating a bank tailored to the needs of local manufacturers.
The Founding Vision
On the last day of 1881—a Sunday—127 entrepreneurs gathered to create something new. On December 31, 1881, a group of 127 entrepreneurs and merchants from Sabadell, led by the Gremi de Fabricants de Sabadell (Manufacturers' Guild), founded Banco Sabadell. Its purpose was to finance local industry and supply raw materials—such as wool and coal—on more favorable terms.
This was not your typical bank founding. The bank's initial share capital was set at 10 million pesetas, contributed by 127 shareholders, the majority from Sabadell, with a handful from Barcelona and one from Barberà del Vallès. The bank's first office was located in the ground floor of the guild's building.
Founded on the last day of 1881 as a cooperative and opening its doors to the public in February 1882, Banco Sabadell has a track record of 140 years spent advising and financially serving people and companies.
What made Banco Sabadell unusual from day one was its hybrid model. In addition to traditional banking, Banco Sabadell initially engaged in other business activities, including buying and selling raw materials, importing machinery, and establishing electrical installations. This phase lasted until 1907, when the bank decided to divest its non-banking activities and focus solely on commercial banking operations.
The bank was part industrial cooperative, part merchant financier, part infrastructure developer. It bought wool wholesale from global markets and sold it to local manufacturers at favorable terms. It imported the latest British textile machinery. It even wired Sabadell for electricity before most of Spain had electric light.
Key Lesson: The Cooperative DNA
The critical insight here is that Banco Sabadell was born from collective self-interest—127 merchants pooling resources to solve a problem none could solve alone. That cooperative DNA, that deep embeddedness in the SME economy of Catalonia, would persist for 140+ years. It's the same DNA that made Sabadell shareholders overwhelmingly reject BBVA's offer in 2025—because for many of them, the bank isn't just an investment; it's the institution that financed their family's business through multiple generations.
The transition in 1907 is worth noting: by choosing to exit raw materials trading and focus exclusively on financial services, the founders demonstrated strategic discipline that would characterize the bank's evolution. They recognized the risks of sector concentration and pivoted to what they did best. This adaptability—knowing when to stick to your knitting while simultaneously knowing when to expand—would prove essential to survival.
III. Survival Through Turmoil: Civil War to First Branch (1907-1965)
Navigating Crisis
The next half-century would test whether the cooperative bank could survive forces far beyond the control of any institution. The 1920s and 1930s were characterised by the economic crisis, political instability, and social conflicts, difficulties that the bank overcame thanks to the good governance that emerged from the crisis of confidence that the bank had experienced in 1926.
That reference to 1926 is intriguing—the bank clearly experienced some internal turmoil during Spain's turbulent interwar years, and whatever reforms emerged from that crisis apparently created more resilient governance structures. The details are lost to history, but the pattern is clear: crisis leading to institutional reform, making the bank stronger for the next challenge.
Spain's neutrality in World War I brought indirect benefits through heightened export demand for textiles, bolstering client industries, but the postwar period introduced economic instability, including inflation and labor unrest in Catalonia.
Then came the catastrophe: the Spanish Civil War (1936-1939), which tore the country apart and was particularly brutal in Catalonia. Barcelona fell to Franco's forces in January 1939, and the subsequent decades would see the suppression of Catalan language and culture. For a proudly Catalan institution like Banco Sabadell, this meant navigating an authoritarian regime hostile to regional identity while maintaining connections to the local business community that was its lifeblood.
Post-War Rebuilding
In the 1940s, the bank focused its activity on stabilising its situation and restoring normality after the Spanish Civil War. Years later, it had gained a high degree of trust. The country's economic recovery had allowed it to grow in terms of operations and share capital until, in 1965, it opened its first office situated outside Sabadell, in Sant Cugat del Vallès.
That single sentence—"in 1965, it opened its first office situated outside Sabadell"—contains multitudes. For 84 years, Banco Sabadell operated essentially as a single-location bank. A bank so embedded in its community that expansion wasn't just unnecessary; it would have betrayed the institution's identity.
During the 1950s and 1960s, coinciding with Spain's "economic miracle" of rapid industrialization and GDP growth averaging over 6% annually, Banco Sabadell expanded its branch network primarily within Catalonia. This regional focus facilitated targeted lending to small and medium-sized enterprises (SMEs) in the area's textile and manufacturing sectors, which drove the bank's operational and share capital growth without venturing into high-risk exposures.
The Independence Mechanism
Then, in 1953, the shareholders did something that would prove extraordinarily prescient seven decades later: In 1953, in order to preserve the organisation's independence, the shareholders created a share syndication agreement. In 1953, Banco Sabadell's shareholders signed a syndication agreement to ensure the bank's independence, limiting individual shareholdings to 0.7% of the total capital. This move protected the institution from potential takeovers.
The anti-takeover DNA was coded into the institution 72 years before BBVA would make its hostile approach. The founders' descendants understood that their cooperative's value lay in its independence—its ability to serve local industry without answering to distant masters. That independence instinct would prove crucial in 2024-2025.
IV. Breaking Out: From Regional to National (1965-2000)
Geographic Expansion
From then on, the bank's branches spread to nearby towns as far as Barcelona, becoming firmly established and contributing to the economic and business development of the region. Shortly after that, it opened its first branch in Madrid, and at the end of the 1970s its first foreign branch, in London.
In 1975, it expanded beyond Catalonia, opening a branch in Madrid. In 1978, Banco Sabadell expanded internationally, initially in the City of London.
The London branch is particularly significant. Even as a small regional bank, Sabadell understood that international trade finance—helping Catalan manufacturers buy raw materials and sell finished goods globally—required international presence. This bias toward international trade, established in the late 1970s, would shape the bank's strategic identity for the next half-century.
Technology Leadership
Here's where Sabadell's story diverges from many regional banks that simply grew fat and complacent. The bank is a pioneer in bank computing in Spain. In 1968, it automated accounting and administrative processes. In 1986, it introduced remote banking: the telephone and computer were incorporated as new channels for communication and service provision.
This technology-forward mentality is crucial context for understanding both the TSB acquisition rationale and the subsequent IT disaster. Sabadell saw itself as a technology leader—a bank that could export its proprietary Proteo banking platform to international acquisitions. That confidence, ultimately, would prove both justified and tragically overconfident.
The last two decades of the 20th century were characterised by two levers of transformation. On the one hand there was technology, with a strong commitment by the bank to consolidate the computerisation of its processes and implement the teleprocessing of data. On the other was its configuration as a business group through the creation of subsidiaries that could respond to the specialisation needs of an increasingly extensive and internationalised commercial network.
The First Acquisition
In 1996, the bank's first non-organic deal was formalised with the purchase of the NatWest España group.
After 115 years of organic growth, Sabadell made its first acquisition—and significantly, it was an international bank's Spanish operations. This wasn't just adding branches; it was demonstrating capability to absorb and integrate other banking cultures. The NatWest deal was small, but it established a template: identify distressed or non-core banking assets, acquire cheaply, integrate rapidly onto the Sabadell platform.
That template would prove extraordinarily valuable in the decade to come.
V. Transformation: IPO & The Acquisition Machine (2001-2008)
Going Public
The new millennium began with the purchase of Banco Herrero and its flotation, which took place on 18 April 2001.
Since 2001, it is floated on the Bolsa de Madrid and is part of the IBEX 35. In 2004, the bank's shares were included in the IBEX 35 index.
The IPO and Banco Herrero acquisition in 2001 marked a transformation from regional cooperative to publicly-traded national player. Under the leadership of Josep Oliu i Creus, who became chairman in 1999, the bank began an aggressive expansion strategy. It entered the IBEX 35 in 2004, shortly after its initial public offering in 2001.
Josep Oliu deserves special attention here. He obtained a degree in Economics from the University of Barcelona and a PhD in Economics from the University of Minnesota. His professional career includes work at the Bank of Spain and leadership at the Instituto Nacional de Industria (INI), before joining Banco Sabadell in 1986.
First appointed as director 29th March, 1990. Re-appointed as director 16th March, 1995, 13th April, 2000, 21st April, 2005, 25th March, 2010, 28th May, 2015 and 28th March, 2019 and 23rd March, 2023. Chairman since 23rd December, 1999.
Oliu has now led Banco Sabadell for over a quarter-century—a tenure that has seen the bank transformed from a Catalan regional player into an international banking group. His background at the Bank of Spain and the state industrial holding company gave him insider knowledge of Spanish banking's regulatory and competitive dynamics.
Strategic Acquisitions
In 2003, the purchase of Banco Atlántico was signed, which meant an increase in size that made Banco Sabadell one of the leading institutions in the Spanish market.
In 2006, Banco Urquijo was acquired, and in 2007, so was TransAtlantic Bank of Miami in the United States.
Each acquisition served a strategic purpose. Banco Atlántico (2003) provided national scale. Banco Urquijo (2006) added private banking capabilities. TransAtlantic Bank of Miami (2007) gave Sabadell a beachhead in the U.S. market and strengthened its international trade finance offering for Spanish companies doing business in the Americas.
Multi-Brand Strategy
Sabadell developed a distinctive multi-brand strategy that preserved acquired banks' regional identities while extracting back-office synergies. SabadellAtlántico: The group's primary brand in the Spanish market. It operates throughout Spain except in SabadellGuipuzcoano and Banco Herrero territories. It focuses on commercial banking for individuals and companies.
SabadellGuipuzcoano: Formerly Banco Guipuzcoano. It is the group's brand in Navarre, La Rioja and the Basque Country. It focuses on commercial and corporate banking.
This wasn't just marketing cleverness—it reflected the reality that Spanish banking remained intensely regional. A Basque business owner might trust "Banco Guipuzcoano" in ways they'd never trust a Catalan bank. By preserving these regional brands while integrating operations onto the Proteo platform, Sabadell could capture synergies without alienating customers.
Pre-Crisis Positioning
As Spain's real estate bubble inflated through the mid-2000s, many Spanish banks gorged on mortgage lending and construction finance. Sabadell, notably, took a more cautious approach. The bank's SME focus and international trade orientation meant less exposure to the speculative domestic real estate lending that would destroy so many savings banks (cajas) in the crisis to come.
This positioning—whether by design or by the bank's SME DNA—would prove extraordinarily valuable when the music stopped.
VI. INFLECTION POINT #1: The Spanish Banking Crisis & Opportunistic Growth (2008-2014)
The Crisis Context
September 2008. Lehman Brothers collapses, and Spain's real estate bubble bursts with devastating force. The main cause of Spain's crisis was the housing bubble and the accompanying unsustainably high GDP growth rate. The ballooning tax revenues from the booming property investment and construction sectors kept the Spanish government's revenue in surplus, despite strong increases in expenditure, until 2007.
The Spanish banking sector experienced a profound crisis starting in 2008. Its weaknesses stemmed from both conjunctural and structural factors. Starting in the mid-1990s, Spain accumulated increasing macro-financial imbalances including excessive credit growth that was heavily directed to the real estate sector. The rapid expansion of savings banks that had started in the mid-1980s generated additional financial stability risks as many of these firms were subject to little market discipline, poor governance and unsustainable business models. The latter were characterised by a large risk concentration in the real estate market and the dependence on unstable wholesale funding.
Spain's banking system would collapse from 55 institutions before the crisis to just 10 survivors. The question was: who would be the acquirers, and who would be acquired?
Banco Sabadell positioned itself as a one of the buying entities in the process of bank concentration triggered by the great financial crisis, which erupted in 2008 following the collapse of Lehman Brothers.
The CAM Acquisition: A €1 Masterpiece
The acquisition of Banco CAM occurred on 7 December 2011. Banco Sabadell was the only entity that reached the end of the auction process organized by the Fund for Orderly Bank Restructuring (FROB). The purchase of Banco CAM was closed for the symbolic price of one euro.
One euro. For a bank that had been the fourth-largest savings bank in Spain, with 70,000 million euros in assets and over 6,500 employees. The math only makes sense when you understand the asset protection scheme.
The Bank of Spain awarded Caja de Ahorros del Mediterráneo (CAM) to Banco Sabadell for a symbolic price of one euro after the Deposit Guarantee Fund (FGD) subscribed to one or several capital increases of the entity for an amount of 5,249 million euros. Additionally, the FGD granted CAM an asset protection scheme whereby it would assume 80% of the losses derived from said portfolio over a ten-year period.
Between July and December the Deposit Guarantee Fund had to allocate nearly 12,400 million euros to cover the losses from the liquidation of loans and businesses (mostly real estate) that the entity had. Added to this were 3,880 million in CAM provisions and the 1,786 million that Sabadell directly assumed (20% of the asset protection scheme). A total of 18,066 million euros in losses.
The Spanish state effectively paid Sabadell to take CAM off its hands—injecting €5.249 billion in capital and covering 80% of potential losses on the toxic real estate portfolio. From Sabadell's perspective, this was an extraordinary opportunity: instant geographic diversification into Valencia, Murcia, and the Balearics, hundreds of branches, and millions of customers—all for €1 plus integration risk.
The incorporation of Banco CAM into the Banco Sabadell group meant the consolidation of the entity as the fourth banking group in Spain and a fundamental complement for its development and expansion in an area of great economic dynamism such as the Valencian Community, Region of Murcia and Balearic Islands.
The Acquisition Spree
In Spain, it acquired Banco Guipuzcoano (2010), Banco CAM (2011), the branch network in Catalonia and Aragon of the former Caixa Penedès (2012), Banco Gallego, and the Spanish business of Lloyds (2013).
Acquired Banco Gallego and Lloyds Banking Group's retail and private banking business and the local investment management business in Spain, Lloyds Bank International. Lloyds is selling its loss-making Spanish operations for a 1.8% stake in Sabadell, worth about €84 million, plus an additional sum of up to €20 million over the next five years.
Five years, five major acquisitions. Each deal followed a similar pattern: distressed asset, favorable terms from regulators or sellers desperate to exit, rapid integration onto the Proteo platform. The Lloyds deal is particularly notable—Sabadell was essentially being paid to take loss-making operations through the equity stake and contingent payments.
The Result
The bank became one of the largest institutions in the Spanish financial system during these years, tripling its size, geographically diversifying its business, and increasing its customer base sixfold, all while safeguarding its solvency and liquidity.
Tripled in size. Customer base increased sixfold. And unlike so many acquirers during banking crises, Sabadell maintained its balance sheet quality throughout. This wasn't reckless empire-building—it was calculated opportunism by a management team that understood both integration risk and crisis economics.
The crisis-era acquisitions established Sabadell as an integration machine. Each deal proved that the bank could absorb institutions of similar size (CAM was comparable to Sabadell's pre-acquisition scale), migrate them to the Proteo platform, extract synergies, and emerge stronger. This track record gave management the confidence—perhaps overconfidence—to attempt something far more ambitious: an international acquisition in the UK.
VII. INFLECTION POINT #2: TSB Acquisition & International Ambitions (2015-2017)
The TSB Deal
In March 2015, Sabadell announced a deal that would transform it from a Spanish champion into an international banking group. On 12 March 2015, TSB confirmed a takeover bid by Sabadell for ÂŁ1.7 billion, less than a year after it rejoined the stock market through Lloyds Banking Group's sale of 50% of its holding. TSB agreed to the takeover on 20 March 2015 which was completed on 8 July 2015.
The backstory explains why TSB was available. A European Commission ruling that the British government's 2009 purchase of a 43% stake in Lloyds Banking Group counted as state aid made it necessary for Lloyds Banking Group to sell a portion of its business; TSB was divested.
TSB was a forced seller—Lloyds had no choice but to divest under EU state aid rules. Sabadell saw opportunity in that distress, just as it had with CAM and other crisis-era acquisitions.
In an attempt to move into the retail sector, Spanish banking group Banco Sabadell has taken over TSB for ÂŁ1.7 billion, which will also help the UK bank make an impact in the small business lending market. As reported in The Financial Times, the acquisition was made with a view of globalising Banco Sabadell, instead of remaining as a Spanish only bank and 22% of the bank's assets are set to be held outside of the country, rather than the 5% at present.
Strategic Rationale
In February 2014, Banco Sabadell started its 2014–2016 business plan, Triple, that aims to leverage its new size and margin-generating capability. The main goal of the 2014–2016 Triple Plan is profitability. Key themes of the new plan are transformation (transformation of the business, transformation of the production process and transformation of the balance sheet) and internationalization (laying the foundations for becoming more international in terms of structure and resources and entering new markets).
In October 2015, Sabadell Group outlined its plans for TSB to continue as a competitor in the UK banking sector, by further expanding into the small business banking market, and introducing cardless emergency cash and mobile payments. Sabadell also confirmed that the TSB name would be retained, as the group felt it was a "very powerful" brand with "traction" in the UK.
The logic was compelling. TSB had 5 million customers, a strong brand in the UK (the Trustee Savings Bank name dated back 200 years), and potential for SME banking growth that aligned with Sabadell's core competency. The UK represented a large, stable, English-speaking market—the world's fifth-largest economy at the time.
The Technology Plan
Here's where the strategy became simultaneously brilliant and tragically flawed. Sabadell planned to migrate TSB off Lloyds' legacy systems onto a UK version of its proprietary Proteo platform.
TSB's banking platform, which had used that of Lloyds Banking Group, was migrated to a UK-based replica of Sabadell's Proteo platform by the end of 2017.
Lloyds must now pay ÂŁ450 million to migrate TSB's technology systems onto the Sabadell platform.
The financial engineering was elegant: Lloyds was paying ÂŁ450 million toward migration costs as part of the deal structure. Sabadell had estimated ÂŁ160 million in annual technology synergies once TSB was on the Proteo platform. The migration was supposed to be a profit center.
The bank had done this before—repeatedly—with Spanish acquisitions. What could possibly go wrong?
VIII. INFLECTION POINT #3: The TSB IT Disaster (2018)
What Happened
TSB has been fined ÂŁ48.65m by UK finance regulators for failures that led to an IT meltdown during the migration of millions of customer accounts between banking systems. In April 2018, the bank was moving from Lloyds Banks systems, where they were hosted, to a new core banking system from its owner, Spanish bank Sabadell, known as Proteo4UK. Disaster struck when TSB migrated millions of customer accounts from the systems of Lloyds Bank, which hosted them, to the new platform. Over a five-day period, users were locked out, experienced money disappearing, and some were even able to see other customers' accounts.
However, soon after the system went live on 22 April 2018, TSB encountered serious issues. Although the data migration itself was successful, 1.9 million of their 5.2 million customers were locked out of their accounts.
The irony is excruciating: the data migration actually worked. 1.3 billion records transferred successfully. But the platform itself wasn't ready for prime time, and nearly 2 million customers couldn't access their money.
Root Causes
TSB's decision to undertake a large "big bang" migration of customer accounts over one weekend—a "single-event implementation", as the report described it—was a problem because the bank did not give enough consideration to the risks.
Independent investigators from law firm Slaughter and May have concluded that TSB's aims to migrate five million customer records onto a 'state-of-the-art' system in 2018 was unprecedented in the UK and incredibly complicated. For instance, the design, build and testing of the Proteo4UK system, developed by SABIS, involved the work of over 70 suppliers and more than 1,400 people. Moreover, there was also a lack of robust testing with regards to the new system, dubbed Proteo4UK, and TSB also lacked sufficient oversight over its suppliers.
TSB people were saying that Sabadell had done this many times in Spain. But tiny Spanish local banks are not sprawling LBG legacy systems.
The comparison to Spanish acquisitions proved fatally misleading. Spanish regional banks were small; TSB had 5 million customers. Spanish banks were already operating in Spanish regulatory and operational contexts; TSB required UK-specific customizations. Spanish deals gave Sabadell full access to source systems; with TSB, Lloyds remained the supplier of the legacy system, limiting visibility into what they were migrating from.
Elements of the two data centres built to support the new platform were, in certain aspects, configured inconsistently. Despite extensive testing, this configuration issue was not identified prior to migration. As a result of the access problems affecting TSB's online channels, large numbers of TSB customers tried to use TSB's physical and telephone banking channels to access their accounts—levels of contact which these channels were unable to withstand.
The Fallout
When customers couldn't access their accounts, fraudsters saw opportunity. According to a report by law firm Slaughter and May, which investigated the disaster, these fraud attempts were 70 times higher than normal levels at one point during the crash.
In February 2019, the bank revealed the disaster had cost ÂŁ330 million, with ÂŁ125 million of the figure in customer compensation, ÂŁ122 million for emergency recruitment, ÂŁ49 million in fraud, and ÂŁ33.5 million in uncollected fees.
TSB has already paid ÂŁ32.7m in redress to customers who suffered detriment, and its then CEO, Paul Pester, fell on his sword, leaving the company soon after the disaster.
The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have fined TSB Bank plc a total of ÂŁ48,650,000 for operational risk management and governance failures, including management of outsourcing risks, relating to the bank's IT upgrade programme. Technical failures in TSB's IT system ultimately resulted in customers being unable to access banking services.
Lessons Learned
The TSB disaster is now a canonical case study in IT project management courses worldwide. The lessons are clear:
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Big bang migrations carry catastrophic tail risk. A phased approach would have been slower and more expensive but would have caught the data center configuration issue before it affected all 5 million customers.
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Past success doesn't guarantee future success. Sabadell's Spanish integration track record was real but irrelevant to the UK context.
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Operational resilience is existential for banks. Customers will tolerate many things; they will not tolerate being unable to access their money.
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Governance must include "common sense" challenges. The Slaughter and May report noted that the TSB board asked pertinent questions but failed to ask obvious ones—like why they expected to be ready just four months after the original delay when some workstreams were seven months behind.
What's remarkable is that TSB survived. Under new CEO Debbie Crosbie, the bank stabilized, eventually achieved profitability, and by 2024 was contributing meaningful profits to the Sabadell group. In 2024, TSB delivered pre-tax profits of £285 million, marking a 21% year-over-year increase and contributing €253 million to the parent group's earnings—its highest annual input to date.
IX. INFLECTION POINT #4: Catalan Independence Crisis & HQ Relocation (2017)
The Political Crisis
In October 2017, even as Sabadell was preparing for the TSB migration, a different crisis was unfolding at home.
The political turmoil in Catalonia during the 2017 independence referendum led Banco Sabadell to relocate its corporate headquarters to Alicante (in Valencia, another autonomous community of Spain) on October 5, 2017, citing the need to ensure the stability of deposits and customer confidence. The move was facilitated by a Spanish government decree allowing expedited relocations.
Sabadell was one of the thousands of companies that made the decision to leave Catalonia in October 2017 when the self-determination referendum organized by Carles Puigdemont's government, ruled illegal by the Constitutional Court, pitted the Catalan administration against the rest of the state structure. At the time, it was argued that the decision was taken to stop the flight of deposits from people who feared that the independence process could lead to the loss of their savings.
Many customers had withdrawn their deposits from banks headquartered in Catalonia to protect themselves from the possible impact of a unilateral declaration of independence. If Catalonia had succeeded in breaking away from Spain, the European Central Bank's deposit insurance scheme would no longer protect bank customers in the region.
For a bank founded in Sabadell, named for Sabadell, and embedded in Catalan business culture for 136 years, this was wrenching. But the logic was irrefutable: customers were pulling deposits, and if Catalonia left Spain (and therefore the EU), the bank would have lost ECB supervision, ECB liquidity facilities, and deposit insurance coverage. Independence would have meant institutional death.
The Return Home
Banc Sabadell has approved the return of its headquarters to Catalonia seven years after moving to Alicante amid the Catalan independence push. The entity changed its fiscal address due to the uncertainty due to the political situation in Catalonia at the time, according to the bank's leaders.
The move was agreed by the lender's board at an extraordinary meeting and comes as Sabadell is fighting a hostile takeover bid from its larger rival BBVA. The bank, which was founded in 1881 in Sabadell, a city of around 200,000 located north of Barcelona, has cited its importance to the wealthy northeastern region's economy as one of the reasons for opposing the takeover bid launched in May. The board decided "that the time is right to return to its place of origin now that the circumstances that motivated its move over seven years ago no longer exist."
The timing—January 2025, during the BBVA takeover battle—was not coincidental. Returning to Catalonia reinforced Sabadell's identity as a Catalan institution and mobilized regional political support against the takeover. The head of the regional government of Catalonia, Salvador Illa of Spain's ruling Socialist party, said Sabadell's decision was "good news" that shows "we are on the right track". Illa became head of Catalonia's government last year following a regional election, ending more than a decade of separatist rule.
X. INFLECTION POINT #5: The BBVA Hostile Takeover Battle (2024-2025)
The Initial Approach
On May 9th 2024, BBVA announced its hostile takeover bid for Banco Banco de Sabadell, aiming to acquire a 100% stake in an all-share offer valued at €11.38 billion. The acquisition could potentially create Spain's second-largest bank surpassing the more renowned Santander.
In 2020, BBVA tried to merge with Banco Sabadell, but it didn't work out. The two banks had initiated a review process and even designated external advisors, but they couldn't agree on the price of the shares. At that time, Banco Sabadell was struggling due to the pandemic, making it an attractive option for a merger. BBVA, on the other hand, had just sold its US subsidiary for 9.7 billion euros, giving it a significant boost.
This was BBVA's second attempt. The 2020 merger talks collapsed on valuation—Sabadell felt undervalued while recovering from the pandemic and the TSB aftermath. By 2024, Sabadell was in a much stronger position, which made it simultaneously more attractive (proven turnaround) and harder to acquire (management confidence).
The proposed merger is expected to generate €850 million in annual synergies, primarily from cost reductions and operational streamlining, while also reinforcing BBVA's digital leadership. The acquisition is part of the greater European banking consolidation to create some competitive banks at a global scale.
The Battle Lines
Sabadell's board rejected the offer immediately. This time around, however, Banco Sabadell is in a stronger position, making it harder to reach an agreement. In fact, on May 6th, Banco Sabadell rejected the merger proposal without even negotiating.
The opposition was remarkably broad:
- Management and Board: Unanimously opposed, arguing the bid undervalued Sabadell and its prospects
- Spanish Government: Concerned about competition implications, especially for SME lending
- Catalan political leaders: Viewed the bid as threatening a key Catalan economic institution
- Unions: Feared job losses from branch consolidation
The Spanish government has shown opposition to BBVA's bid, arguing that the merger could threaten competition. Sabadell has a large number of SME clients, meaning that a takeover would increase BBVA's market dominance. This could potentially be to the detriment of small businesses.
The Regulatory Gauntlet
Despite opposition, BBVA pushed forward, eventually securing regulatory approvals—but with significant conditions.
As part of this second phase, on 30 April 2025, the CNMC approved the transaction, considering the commitments proposed by BBVA to be appropriate, sufficient and proportionate to resolve the potential risks to competition detected.
On June 24, 2025, the Spanish government approved the economic concentration of BBVA and Banco Sabadell, imposing the additional condition—on top of the remedies agreed with the CNMC—that both banks maintain separate legal entities and shareholders' equity, as well as autonomy in management for a three year period.
This was a killer condition. BBVA would own Sabadell but couldn't actually merge the operations for three years—meaning synergies would be delayed while integration costs accumulated. BBVA decided to proceed anyway.
The Defense
Sabadell deployed multiple defense mechanisms:
Strong financial performance: The bank's profitability grew by 343 basis points in the year, reaching ROTE of 14.9% and is expected to be circa 14% in 2025 and above that in 2026. Net interest income rose, with strong growth in mortgage lending and business financing.
In 2024, Banco Sabadell achieved its largest-ever net profit, over 1,800 million euro. Consequently, the return on tangible equity (ROTE) climbed to 14.9%.
TSB sale to Santander: In a masterstroke, Sabadell agreed to sell TSB to Santander for £2.65 billion—nearly double the £1.7 billion acquisition price. Sabadell bought TSB in 2015 for £1.7 billion, making the sale a notable gain for the bank.
The move comes as Sabadell faces a hostile takeover bid from rival Spanish lender BBVA, which has valued Sabadell at around €15 billion following an initial offer last year. While Sabadell's board has consistently opposed the bid, the sale of TSB is widely seen as a defensive measure to strengthen the bank's independent position and simplify its business.
The TSB sale served multiple purposes: it generated cash for an extraordinary dividend, simplified the business (removing international complexity that BBVA might have used to justify synergies), and demonstrated that standalone Sabadell could generate value.
Shareholder returns: In July, Banco Sabadell announced a new strategic plan to deliver €6.3 billion of returns to shareholders over the next three years as it kicks off a programme accelerating growth and maintaining sustainable shareholder returns.
The Finale
Spanish bank BBVA's €17bn hostile takeover attempt of smaller rival Banco Sabadell has collapsed, with the lender managing to secure just a quarter of its target's shares—a stinging setback for executives who had bet their reputations on the merger. The result marks a personal defeat for BBVA chair Carlos Torres, a former McKinsey consultant, whose insistence that the deal was "unstoppable" had dominated the bank's agenda for the past 18 months. According to Spain's market regulator, the CNMV, Sabadell shareholders controlling nearly 75% of the Catalan lender's stock rejected BBVA's tender offer.
The offer has been accepted by Banco Sabadell shareholders representing 25.5 percent of the voting rights, so the offer is no longer in effect as the minimum acceptance condition has not been met.
Not even close. BBVA needed 50% (or 30% for a second attempt). They got 25.47%. The news comes as a heavy defeat for BBVA chair Carlos Torres, who unsuccessfully bid for Sabadell in 2020.
XI. Strategic Analysis: What Does Sabadell's Survival Mean?
The Bull Case
SME Dominance: Sabadell's SME franchise is deep and defensible. It is a universal bank and specialises in serving small and medium enterprises (SMEs) and the affluent with a bias towards international trade. SME relationships are sticky—built on decades of trust, personal relationships with branch managers, and understanding of specific business needs. This isn't easily replicated.
Demonstrated Turnaround Capability: The bank went from the TSB disaster to record profitability. Management proved it can fix problems and deliver results. Banco Sabadell once again boosted its financial strength in 2024, mainly driven by increased revenue, cost containment and continuous improvement of asset quality, which has enabled it to reduce allocations to provisions and improve its cost of risk beyond the anticipated level. As a result of this level of profit, the Group generated 83 basis points of capital in the year, with the CET1 ratio standing at 13%, after announcing the share buyback programme. Its Return on Tangible Equity (RoTE) also grew by 343 basis points to reach 14.9% at year-end 2024.
Capital Return Machine: All of the above, together with a good execution of strategy, means that the Institution has generated capital organically and steadily with a view to offering attractive remuneration to its shareholders. The estimate for 2025-2027 is 6.45 billion euros, representing close to 40% of Banco Sabadell's current market value.
Simplified Structure Post-TSB: With TSB sale, Sabadell becomes a focused Spanish SME bank with Mexico operations. Simpler to manage, simpler to value.
The Bear Case
Scale Disadvantages: At €17 billion market cap, Sabadell remains small by European banking standards. Technology and regulatory compliance costs hit small banks harder on a per-unit basis.
Interest Rate Sensitivity: Spanish banks benefit from higher rates; when rates normalize, margins will compress.
Concentration Risk: Heavy dependence on Spanish economy, particularly SME sector. A Spanish recession would hit Sabadell disproportionately.
Future Consolidation Pressure: BBVA lost this battle, but European banking consolidation continues. The political protection that saved Sabadell this time may not hold forever.
Porter's Five Forces Analysis
Threat of New Entrants (Low-Medium): Banking regulation creates high barriers. However, neobanks and fintechs are nibbling at specific products (payments, consumer lending).
Supplier Power (Low): Banks are price-takers on deposits but have flexibility in funding mix.
Buyer Power (Medium-High): SMEs have alternatives for banking services; relationship stickiness partially offsets.
Threat of Substitutes (Medium): Fintech and non-bank lenders offer alternatives to traditional bank products.
Competitive Rivalry (High): Spanish banking is intensely competitive among remaining players post-consolidation.
Hamilton Helmer's 7 Powers Framework
Scale Economies: Limited—Sabadell lacks the scale of CaixaBank or Santander.
Network Effects: Modest—being part of the Spanish banking infrastructure provides some network benefits.
Counter-Positioning: This is Sabadell's strongest power. Its SME focus represents a position that larger banks find unattractive to copy fully. Serving 100,000 SMEs requires branch presence, relationship managers, and local knowledge that consolidating banks have abandoned in pursuit of efficiency.
Switching Costs: Moderate for retail customers, higher for SMEs with complex credit facilities.
Branding: Strong regional brands (inherited from acquisitions) create trust that generic "big bank" branding cannot match.
Cornered Resource: The SME relationships themselves are a cornered resource—built over decades, impossible to replicate quickly.
Process Power: The Proteo platform, despite TSB's disaster, provides integration capability that supports acquisition strategy.
XII. Investment Implications & Key Metrics
Current Position
Banco Sabadell reported EUR17.69B in Market Capitalization this November of 2025.
The bank trades at roughly 10x earnings with a 6%+ dividend yield—attractive by European banking standards but reflecting ongoing uncertainty about Spanish rates, economic outlook, and potential future consolidation.
Key KPIs to Monitor
1. SME Loan Volume Growth: This is the single most important metric for Sabadell's long-term competitive position. If SME lending is growing, the core franchise is healthy. If it's shrinking, the bear case is playing out.
2. Return on Tangible Equity (ROTE): Management has guided to 14% in 2025 and 16% by 2027. Banco Sabadell's Chief Executive Officer César González-Bueno asserted that "following conclusion of the takeover bid, the third quarter's solid results reaffirm that the Bank is well on track to meet the year-end targets set out in the 2025-2027 Strategic Plan." Sabadell's CEO went on to say that "the dividend per share over the next three years will be higher than the 20.44 cents paid in 2024, while profitability will reach 16% by the end of the plan."
ROTE measures the efficiency of equity capital deployment—a bank that can consistently deliver 14-16% ROTE in a moderate interest rate environment has demonstrated real franchise value.
3. Cost of Risk: The NPL ratio has dropped to its lowest since 2009, and cost of risk continues to improve. Any deterioration here would signal economic stress affecting the SME book.
Material Risks & Overhangs
Regulatory Risk: European banking regulation continues to evolve. Capital requirements, digital euro implications, and ESG disclosure requirements all create compliance costs.
Economic Risk: Spain's economy is the primary driver of Sabadell's performance. Unemployment, real estate prices, and SME health directly affect credit quality.
Consolidation Risk: While Sabadell survived BBVA, other acquirers may emerge. The Spanish government's protective stance may not extend to all future scenarios.
XIII. Conclusion: The Cooperative's Vindication
On New Year's Eve 1881, 127 wool merchants gathered to solve a collective problem. They needed capital, but no institution would provide it on acceptable terms. So they created their own bank—a cooperative embedded in the fabric of Catalan industrial life.
144 years later, that cooperative DNA—the deep embeddedness in SME communities, the independence instinct coded into shareholder culture, the willingness to absorb pain for long-term autonomy—proved more powerful than a €17 billion takeover offer from one of Europe's largest banks.
Sabadell's survival is not guaranteed. European banking consolidation will continue. The economics of scale that motivated BBVA's bid remain real. Technology costs, regulatory compliance, and competitive pressure don't disappear because shareholders voted "no."
But the Sabadell story offers a different lesson about value creation in banking. In an industry obsessed with scale and efficiency ratios, there may still be a place for institutions whose competitive advantage is knowing their customers—really knowing them, the way a bank knows the businesses it has financed through three generations of family ownership.
The wool merchants who founded Banco Sabadell understood something that modern financial engineering sometimes forgets: banks exist to serve economies, not the other way around. A bank that loses touch with its community loses the reason for its existence.
Sabadell's shareholders—many of them SME owners, many of them customers, many of them Catalans—decided that their bank's independence was worth more than BBVA's premium. That's not irrational; that's stakeholder capitalism in action.
Whether it proves to be the right decision will depend on whether standalone Sabadell can deliver on its promises: 16% ROTE by 2027, €6.3 billion in shareholder returns, sustained SME franchise health. The next three years will tell us whether the cooperative's bet on independence was visionary or merely stubborn.
For now, the wool town bank survives. And in an age of banking consolidation, that alone is remarkable.
As of November 28, 2025, Banco Sabadell remains an independent financial institution listed on the Bolsa de Madrid (SAB.MC), with a market capitalization of approximately €17.7 billion. The sale of TSB to Santander is expected to close in Q1 2026.
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