Catalonia’s banks prepare to move amid fears of customer exodus

Bloomberg

Catalonia’s biggest banks are getting closer to leaving the politically volatile region as customers signaled that a declaration of independence would prompt them to pull their deposits.
Banco Sabadell SA confirmed it will move its headquarters to the Spanish city of Alicante, while CaixaBank SA’s board will consider transferring its registered office to the Balearic Islands, said a person familiar with the matter, who asked not to be identified. No one at CaixaBank was immediately available to comment on the meeting when contacted by Bloomberg News.
The two lenders have spent years seeking to reduce the political risks of being located in Catalonia through expansion, but are once again being pulled into the region’s upheavals following an attempted independence vote on Sunday that resulted in a police crackdown.
Shares of the banks recovered some of this week’s losses following reports of the separatist leaders’ more conciliatory stance. After tumbling on Wednesday by the most in more than a year, Sabadell climbed more than 6% while CaixaBank rallied almost 5 percent. Spain’s IBEX 35 index jumped 2.5%, almost wiping out the
previous day’s declines.
“Markets were looking for a rational solution, and it now looks like we’ll get one,” said Alberto Espelosin, a fund manager at Abante AsesoresGestion. “It’s good to see both sides willing to have some kind of dialogue.”
Some of the Catalan banks’ wealthy clients have already started moving money to lenders outside the region or inquired about doing so, according to an executive at a firm that received calls from prospective customers. Managers at CaixaBank private banking in Madrid have been calling customers to dispel their concerns, according to one client, who asked not to be identified discussing the matter.
On the potential for a customer exodus, CaixaBank said it “has not been affected by any unusual movements in customer deposits,” and that it’s “business as usual.” Sabadell described customer flows as “absolutely normal,” and said “there is no significant movement of deposits” in an emailed
statement.
CaixaBank, founded in 1904, has often worn its origins with pride, conducting business in Catalan and under a blue star emblem designed by Barcelona-born painter Joan Miro. The Caixa group is the main shareholder in Barcelona-based Abertis Infraestructuras SA and holds 24 percent of Gas Natural SDG SA, also based in the city.

Banks’ Expansion
CaixaBank has also grown away from its home region by buying Banca Civica SA, a group of struggling savings banks, during Spain’s banking crisis, and earlier this year took control of Banco BPI in Portugal. Sabadell expanded in the crisis by buying Caja de Ahorros del Mediterraneo and in 2015 acquired the UK’s TSB Banking Group.
“These banks have changed their image to become significant national lenders,” said Ricardo Wehrhahn, Madrid-based managing partner at Intral Strategy Execution. “Outside Catalonia, people don’t normally necessarily think of them as Catalan banks but when a crisis like this emerges, it emphasizes their Catalan heritage.”