Based on the agreement, Banco Sabadell will issue 53,749,680 shares, which represents 1.8% of its total issued share capital, as the price for acquisition of 100% of Lloyds’ two Spanish subsidiaries, held in treasury stock.
Banco Sabadell may also pay Lloyds up to €20m over the next four years as a profitability adjustment tied to 12-month interest rate trends.
Comprising the Lloyds’ retail and private banking business and the local investment management business, the transaction also includes the transfer of £1.5bn of assets, mainly retail mortgages and deposits.
Acquisition of the banking business in Spain will further boost Banco Sabadell’s capabilities to serve the non-resident European clients.
The British group’s corporate banking business, which serves corporate customers will not affect due to the proposed sale and will remain offering services to clients.
In a filing to London Stock Exchange, Lloyds said, "The sale is in line with the Group’s strategy of rationalising its international presence and ensuring best value for shareholders."
The group is also developing a collaboration agreement with Banco Sabadell, for continued support for its customers in the Spanish market and in conjunction with the sale which includes exploring potential business opportunities in retail, commercial, private banking, and asset management.
The transaction is subject to regulatory approval and is expected to complete during 2013 and any cash earnings from the sale will be invested in general corporate purposes.
It is expected that the UK-based firm will sustain a loss of £250m on the sale of the business.
With a commitment to maintaining its stake for at least two years, Lloyds Banking Group will act as a supportive shareholder.
