Until the tense situation in the country is resolved, we believe the Spanish stock market will continue to suffer more than its European peers. As an example of this, in the week up until October 4, Spanish equity funds lost $229 million, according to market data firm EPFR.
Link Securities | Despite the ongoing uncertainty in the wake of last Sunday’s referendum in Catalonia, investors returned to the Spanish markets yesterday, buying up both equities and bonds. The main driver behind this renewed interest is the decision by top Catalan banks, Sabadell and Caixabank, to move their headquarters away from their home base.
At the moment, the biggest losers in the Ibex 35 index after Sunday’s referendum vote in Catalonia are the banks, particularly the Catalan lenders. Both Sabadell and CaixaBank have acknowledged that if independence were to happen, they would move their headquarters to another autonomous region in Spain. In this way they would keep their access to the ECB’s liquidity and their clients would remain under the protection of the national and European Deposit Guarantee Fund. But perhaps it’s too soon to ring the alarm bells: while the Ibex dropped, other European bourses rose. This shows that Catalonia is still far from becoming a systemic risk for the EU.
Caixabank has informed Deutsche Bank’s management team of its interest in the German bank’s Spanish subsidiary in the event of a sale. The approach was made in 2016, before Deutsche Bank reached an agreement with the US Department of Justice to reduce the fine for selling “subprime” mortgages to $7.2 billion
After a long wait, as a result of Banco Portugués de Inversiones (BPI) shareholders’ voting restrictions and after improving its initial offer, CaixaBank is on the verge of gaining control of the Portuguese lender.
Ofelia Marín-Lozano | All the banks have seen a sharp decline in their profitability compared with a decade ago. This is partly due to the heavy provisions made to offset the impact of the property crisis (over 300 billion euros in accumulated terms). But it is also the result of the decrease in pre-provisions operating profit and the requirement for the lenders to raise their capital in line with assets.
The announcement that Santoro Financial (Isabel Dos Santos) will sell its stake in BPI to Caixabank is good news for the Catalan lender. But let’s keep in mind the economic backdrop to all this. The Portuguese economy is currently going through a particularly difficult time, with the existence of serious risks to its financial system.
F. Barciela and F.G. Ljubetic | For several years, Spain’s third biggest bank has been trying to gain full control of Portuguese lender BPI, in which it already holds 44.1%. But up until now it has been unable to fulfill its objective. And it seems undeniable that the reason for CaixaBank’s failure is a young Angolan woman. Isabel dos Santos, 43, is the oldest daughter of José Eduardo dos Santos, one of the longest serving presidents in Africa.
Caixabank is conscious of the fact that the Spanish market is running out of steam and that the future lies in having a strong presence abroad, like its two bigger Spanish rivals (Santander and BBVA). So it is relaunching its initiative to fully acquire Banco Portugues de Investimento (BP), in which it currently holds 44%. It also announced three dividends for 2016.
Renta 4 | Spain’s big banks H2 results expected to be weaker.