National Westminster Bank yesterday brought to a formal close its independent presence in the Spanish retail banking market when it sold 80 per cent of Banco NatWest Espana to Banco Sabadell for pounds 123m.
The UK bank still has an option to sell the rest of the business to Banco Sabadell between 1999 and 2001 at a minimum price of pounds 31m.
Banking analysts said a sell-off of NatWest's remaining holding was likely to take place at the earliest possible date.
NatWest said its investment banking arm, NatWest Markets, would continue to strengthen its presence and activities in Spain, while its private bank Coutts would provide cross-border banking services to Spanish residents.
The sale price is 1.3 times above net asset value. After the reinstatement of pounds 50m in goodwill previously written off by NatWest, the sale will show a loss of about pounds 25m. Banco Sabadell and its regional subsidiary in the Asturias will merge Banco NatWest's operation with its own to create 600 branches throughout Spain.
The sale, first announced in June, marks another step in NatWest's strategy of concentrating on markets where it can develop "a major and profitable presence". In the past few years it has divested itself of retail operations in France, Australia, and the Netherlands.
British banks, including NatWest, have had difficulty in making significant profits on the retail side in Spain because margins are tight and competition from indigenous banking groups is strong.
Over the past year, NatWest has moved to consolidate its strategy of concentrating on retail banking in Britain and Ireland, investment banking and private banking.
It has sold NatWest Bancorp, its US retail arm, for $2.5bn (pounds 1.75bn) and bought Gartmore, the fund manager, for pounds 470m. It recently added Greenwich Capital, the US primary bond dealer, for $590m.
In recent years, analysts had criticised the bank for a lack of strategy but they are now more comfortable with its direction, which includes a large restructuring of its UK branch network.
NatWest pleased the markets last week when it bought back pounds 450m of its own shares, leaving room for more repurchases or the possibility of future acquisitions.
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