Catalan bank shares fall after regional parliament declares independence

Women hold Spanish and Catalan flags during a gathering against Catalonia independence in front of the European Parliament in Strasbourg, France, October 24, 2017. (Reuters/Christian Hartmann)

Shares in Catalan banks closed down today, dragging the entire stock market with them, after Catalonia’s regional parliament declared independence. CaixaBank, Spain’s third largest lender, ended down 2.74 per cent at 3.84 euros while Sabadell, the country’s fifth biggest bank which earns a bigger share of its profits in Catalonia, closed down 4.85 per cent at 1.59 euros.

Shares in the two banks have fallen since Catalonia’s separatist government went ahead with an independence referendum in the wealthy northeastern region on October 1, despite it having been deemed illegal by Madrid and the courts. Some clients withdrew their deposits from the banks, prompting the two lenders to move their legal headquarters out of Catalonia to other parts of Spain.

Neither CaixaBank nor Sabadell have revealed how much money was withdrawn, but they said the flow stopped after they moved their headquarters. Nearly 1,700 companies have moved their headquarters outside of Catalonia since the referendum.

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The International Monetary Fund warned earlier this month that Spain’s strong economic recovery could be dealt a setback if the political turmoil over Catalonia’s independence push continues. Catalonia, a region of 7.5 million people in the region bordering France, generates about 20 per cent of Spain’s economic output.

As a separate country its gross domestic product would be about as big as Portugal’s or Finland’s. Spain’s benchmark Ibex-35 index of most-traded shares closed down 1.45 percent at 10,197.50 points.