Catalan bank shares fall after regional parliament declares independence

Caixabank CEO Gonzalo Cortazar speaks during the bank's third-quarter results briefing on Oct 24, 2017.
Caixabank CEO Gonzalo Cortazar speaks during the bank's third-quarter results briefing on Oct 24, 2017.PHOTO: EPA-EFE

MADRID (AFP) - Shares in Catalan banks fell sharply on Friday (Oct 27), dragging the entire stock market with them, after Catalonia's regional parliament declared independence.

CaixaBank, Spain's third largest lender, fell by around 5 per cent while Sabadell, the country's fifth biggest bank, fell roughly 6 per cent.

Shares in the two banks have fallen since Catalonia's separatist government went ahead with an independence referendum in the wealthy northeastern region on Oct 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Neither CaixaBank nor Sabadell have revealed how much money was withdrawn, but they said the flow stopped after they moved their headquarters.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.

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.

 

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