Valuable commercial banking franchise in Spain, especially in the small and midsize enterprise (SME) segment led by a focused management team. Ability to successfully reduce legacy nonperforming assets (NPAs). Modest profitability prospects, which the COVID-19 crisis will further aggravate. Small scale, inefficient, and barely profitable U.K. business, which puts into question Sabadell's expansion in the competitive U.K. market. The negative outlook on Sabadell reflects the probability of a downgrade in the next 18-24 months if we anticipate that the bank's capitalization will deteriorate further, given its current limited room to absorb a worse asset quality performance than the one we are contemplating. The latter could happen if the 2020 downturn proves to be harsher than we expect, or there is
