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.
Catalan lender Sabadell has sold its subsidiary Sabadell United Bank (Sabadell United) to US lender Iberiabank Corporation (IBKC) for a total price of 1.025 billion dollars (967 million euros).
The banks’ non-performing loans ratio continues to show signs of recovery amid the ongoing deleveraging process on the part of households and companies. The balance of impaired loans fell by 18.3% in May to 121,865 billion euros. Against this backdrop, Banco Sabadell and Bankia were the first banks to present their first half results’ report. And the Spanish stock market reacted in a completely different way to each report.
Spain’s top five banks posted a combined net profit of 7.989 billion euros in the first half of 2015, up 48 percent from a year earlier, thanks to the improving economic situation and a decline in bad loans provisions.
MADRID | March 30, 2015 | By Nuria Álvarez, at Renta 4 | Strong gains to remain challenging in the year ahead as banking environment undergoes sectoral changes.
LONDON | Guest comment by Barclays | The financial success of Sabadell’s offer to acquire TSB hinges on its ability to cut TSB’s costs by 20% almost exclusively by migrating it onto a new IT platform, in our view. This looks a challenging aspiration to us and while Sabadell has successfully integrated domestic Spanish acquisitions at some speed, cross-border integration onto the Spanish platform is largely untested and faces the challenges of a different regulatory framework and different product design. It clearly helps that Lloyds will pay for the integration spend but we believe that meeting the near-term target of EPS neutrality will require a relatively quick delivery of the cost savings.
The Corner | March 20, 2015 | ACF experts believe that “the impact of the acquisition of TSB in earnings per share would be marginally negative in 2015 and 2016, but -5.7% in 2017 if a new synergy plan is not presented.”
MADRID | March 16, 2015 | By Fernando G. Urbaneja | The hardest hit stock on the Ibex 35 last week was Sabadell bank, with the lender losing 7% of its valuation after news emerged of a pending takeover bid for British bank TSB.
MADRID | By Jaime Santisteban | Caixabank’s net profit dropped by 54.6% to €152M in the first quarter. Analysts highlight the positive impact of integrating Banco de Valencia and Banca Cívica. Spain’s third biggest bank by market value improved its margins and reduced its NPL rate for the first time since the crisis started.