Valuable commercial banking franchise in Spain, especially in small and midsize enterprises (SMEs). Management's proven ability to successfully implement strategic and integration plans. Geographical diversification provided by the U.K. acquisition. Subdued profitability and modest level and quality of capitalization. Sizable portfolio of foreclosed assets in Spain. Lack of scale and challenging IT migration in the competitive U.K. market. The stable outlook reflects our view that Banco de Sabadell S.A. will continue to gradually improve its profitability in the next two years, reaching a risk-adjusted capital (RAC) ratio of between 6.0%-6.5% in the next 12-18 months (up from 4.7% as of December 2014). We anticipate that Sabadell will show moderate credit growth, with no significant step-up in risk appetite, both in
