Banks consider fleeing Catalonia over split from Spain

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Banks consider quitting Barcelona as Catalonia threatens split from Spain – Oct. 5, 2017

Catalonia: What you need to know

Catalonia could lose two of Spain’s biggest banks if political leaders in the region press ahead with a threat to declare independence.

Banco Sabadell confirmed it was thinking about moving its legal home out of the region, and another major financial institution — Caixabank (CAIXY) — was reported to be considering doing the same.

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Sabadell’s board is meeting Thursday to discuss a move from Barcelona — Catalonia’s regional capital. The most obvious alternative location is Madrid, the capital of Spain.

Catalonia’s regional government says it could make a unilateral declaration of independence from Spain as early as Monday, following a referendum on Sunday in which two million Catalans voted to break away.

That could plunge Spain’s most productive economic region, and the country as a whole, into a political crisis and create enormous legal uncertainty for banks and businesses.

Shares in Spanish banking stocks plunged on Wednesday as investors woke up to the risks. The shares bounced back on Thursday as reports of the contingency plans emerged.

Catalonia vs Spain: Here’s what could happen next

Caixabank did not directly address reports that it was considering moving out of Barcelona, but told CNN that “the necessary decisions will be taken, in due course.”

The bank said it was focused on “the objective of protecting the interests of our customers, shareholders and employees at all times.”

If Catalonia declares independence, the Spanish government in Madrid may react by imposing direct rule on the region — a crackdown that could escalate tensions and create further turmoil, scaring away investors, worrying savers, and disrupting business.

And if Catalonia does succeed in breaking away, it’s likely to find itself shut out of the European Union and its system of banking regulation.

The EU offers safety nets and rules to rescue unstable banks and protect their customers. And banks based in one EU country are able to do business across the entire region of 500 million people.

banco de sabadell spanish bank spain catalonia
Banco de Sabadell has its headquarters in Barcelona, Spain, which is the capital of the Catalonia region.

Banks are free to move their legal headquarters within a country, but would need various approvals if they wanted to move across national borders.

At least one Catalan business isn’t waiting to find out whether a split will come — it has already taken the plunge.

Biotech firm Oryzon Genomics said on Monday that it was moving to Madrid from Barcelona to “optimize its operational effectiveness and the relationship with its investors.” Its shares have surged by as much as 29% since.

CNNMoney (London) First published October 5, 2017: 10:48 AM ET

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