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20th Aug 2022

Catalan separatists under pressure from business

  • Sabadell, Spain's fifth largest bank, has decided to leave Catalonia to "protect clients' interests". (Photo: Matthias Oesterle/ZUMA Wire/dpa)

Catalonia's independence plans have come under more pressure from the financial sector, with banks deciding to move their HQs and ratings agencies downgrading the region.

On Thursday, the Sabadell bank, Spain's fifth largest, decided to move from Barcelona to Alicante, saying it needed to protect the interests of its clients, depositors and shareholders.

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The bank has lost almost 15 percent of its value on the markets over the last week.

Another bank, CaixaBank - Catalonia's main bank and Spain's third biggest bank - is expected to take the same decision on Friday and move from Barcelona to Palma de Mallorca or Madrid.

Also on Friday, the Spanish government is expected to issue a decree that will allow companies based in Catalonia to move out of the region without holding a shareholders meeting.

Ibex, the Madrid stock exchange's main index, was up 2.51 percent on Thursday, after losing 2.85 percent the day before.

Sabadell shares went up 6.16 percent after the bank's decision to move was announced. CaixaBank's shares rose 4.93 percent.

The two banks' decisions to leave Catalonia, a day after the region's leader Carles Puigdemont suggested that separatist authorities could declare independence in the coming days, demonstrates business's fears at potentially being taken out of the EU and the eurozone.

Last Sunday's independence referendum "has provoked an avalanche of requests about taxation, procedures to move headquarters, and other questions like bank deposits, contracts, etc." a consultant was quoted as saying by La Vanguardia, a Catalan newspaper.

La Vanguardia also reported that the Catalan government established a crisis group on Thursday to address business concerns about the situation.

Pressure on Catalan authorities is also coming from international markets.

'Unforeseeable events'

On Thursday evening (5 October), Fitch announced that it would place Catalonia on "rating watch negative" (RWN) over uncertainties over the region's debt obligations.

The rating agency explained that the stand-off with Spanish authorities and the possibility of Catalonia's independence "may lead to unforeseeable events, including a potential disruption of the state liquidity funds to Catalonia."

It said however that this was not its "base case scenario" and that it expected that "current tensions will ease" and allow it to "resolve the RWN within the next six months".

Another rating agency, S&P, had on Wednesday placed Catalonia on "CreditWatch with negative implications".

It said that the "escalation" between Barcelona and Madrid "may damage the coordination and communication between the two governments, which is essential to Catalonia's ability to service its debt on time and in full."

It said it expected to "resolve the CreditWatch within the next three months."

In Brussels, the EU is following the situation closely, but an official said that there is no plan yet to formally put the Catalan situation on the agenda of the Eurogroup (the meeting of eurozone finance ministers) on Monday, or the Ecofin (the meeting of all 28 finance ministers) on Tuesday.

Catalan leader sends mixed message on independence

In a speech on Wednesday evening, Carles Puigdemont gave no concrete indication of his intentions as his plan to declare Catalonia's independence from Spain has met strong opposition in Europe.

EU urges Spanish and Catalan leaders to talk

MEPs and the European Commission have called on Mariano Rajoy and Carles Puigdemont to "sit together" and find a way out of the crisis over the push for the region's independence, and ruled out any mediation.

Catalonia to declare independence in a few days

Spain's king, Felipe VI, said Catalonia's leaders were breaking up the country's unity as hundreds of thousands of Catalans rallied against police violence at Sunday's referendum.

Catalan leader postpones independence

Carles Puigdemont said that Catalonia "has won the right to be independent" but suspended any unilateral declaration of independence in a plea for dialogue.

Defenders of Spain's unity fight back

Hundreds of thousands demonstrated over the weekend against Catalonia's independence and for a dialogue between Madrid and Barcelona, while pressure is mounting on Catalan leader Carles Puigdemont not to declare independence.

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