The Spanish banking sector’s stock market rally has been suddenly cut short. The listed banks’ index had risen over 45% since the minimum levels of June 2016 until the first week of January. But since then, it is seeing a correction. Two matters of concern for investors are the impact of the floor clauses ruling on the banks profit and loss account, as well as the problems of the Italian banks.
floor clauses’ impact
Just minutes after the the EU ruling on ‘floor clauses’ was released, the banks in Spain’s blue-chip Ibex 35 index ended up dropping over 10%. But most of the lenders recovered ground by the end of the session. Afi estimates the ruling will affect the banking sector as a whole to the tune of some 4.5 billion euros.
Last week the Spanish banking sector began its third quarter results presentations, but analysts are going one step further and are already looking for indications ahead of 2016. The outlook is not wholly favourable if we take into account the factors affecting it on the downside.