Sabadell – softens commitment to sell merchant payments division as Q3 volume grows 33%

Banco Sabadell softened its commitment to wholly divesting its merchant payments division following Q3 results showing sharply improved market share, payment volume and fee income. Worldline, Nexi and Fiserv are all reported to be in the running to pay about €400m for Spain’s largest independent merchant acquirer. Sabadell’s CEO, Cesar Gonzalez-Bueno, said the bank is still evaluating options.

Payment volume was up 33% to €13.6bn in Q3, driven by a continued strong recovery in the Spanish travel and tourism market following the pandemic. Fee income is not disclosed but “continues to grow above turnover,” according to Gonzalez-Bueno. “In other words, we are improving our margins while we keep growing the business.”

Sabadell’s share of POS devices reached a record 20.0%, up 81bps YTD, and its share of payment volume was 16.7%, up 66bps YTD. 

With a business this good, why is Sabadell selling? According to Gonzalez-Bueno it’s about aligning with a partner which has the right products for tomorrow rather than choosing the highest cash offer today. But he indicated that Sabadell had not yet agreed the form a partnership might take, suggesting the bank may be considering a joint-venture or marketing alliance as an alternative to an outright sale. His quote from the Q3 analyst call is worth reading in full.

“We have very clear ideas around what we are looking forward in terms of partnership on our point-of-sale business… we are not only growing in volumes, in number of machines, but also we are growing in income…. .we don’t see any fragility short-term [but]…there is a tremendous potential of upgrading .. the services that we provide in the market. So, anything that we do.., if we do it, and we are analyzing alternatives, would be with an industrial mentality… we will not seek an increase of capital or an increase in value, but generating even more and better business with our clients. So, in that sense, the partnership could take different shapes.”

– Cesar Gonzalez-Bueno, CEO