The sinking ship syndrome?
News Staff Reporter WHATEVER the outcome of the present Constitutional crisis over Cataluña, it has become very clear that business leaders have made the decision to abandon the region, at least legally. At present, around 2,200 companies have already moved their registered offices out of Cataluña to other parts of Spain.
According to the National Statistics Institute, Cataluña accounts for 19 per cent of Spain’s production capacity and had a GDP of €211.82 million in 2016. Its 7.14 million residents constitute 16% of Spain’s population and enjoy a higher wealth per capita than the country’s average.
However, a recent report from Credit Suisse concluded that, regardless of capital flight or the costs of adopting a new currency and creating new state structures, an independent Cataluña would lose 20% of its GDP, with a per capita income falling below the rest of Spain.
In most cases, the decision to move a company’s legal base out of the region is technical and has not involved the closure of operations or job losses, but simply ensures that the company remains officially based on Spanish soil.
It is clearly significant, however, that so many CEOs are afraid of losing investors and international finance, as well as a possible boycott of their products and services, or of existing in the legal limbo of an illegally independent Cataluña.
The region itself must be aware of such concerns which could lead to future relocation, so impacting on income from taxes, as well as generating unemployment. This must be particularly worrying when the market value of the biggest businesses which have made the symbolic change of their registered office address is around €100,000 million; that’s almost half of Cataluña’s 2016 GDP. Last Thursday, the day when Madrid confirmed that Article 155 of the Constitution would be applied, a further 268 Catalan-based companies announced they were following suit.
Amongst the Ibex 35 companies which have taken the step are Spain’s third and fourth largest banks, Caixabank and Sabadell, which are now registered in Valencia and Alicante respectively. Gas Natural Fenosa now has its base in Madrid, as has Abertis, which manages motorways and telecoms infrastructure.
Other listed business include international property corporation Inmobiliaria Colonial and telecoms firm Cellnex, both now with headquarters in Madrid.
Other big names which have decided to move their legal bases include textile firm Dogi, online travel group Edreams, publisher Grupo Planeta and courier company MRW. Of immense symbolic importance within Cataluña is cava manufacturer Codorníu which is now registered in the La Rioja town of Haro.
Zurich Insurance Group and its subsidiary Deutsche Zurich Pension, 50% owned by Deutsche Bank, have gone to Madrid, while insurance and asset management group AXA Spain has moved its two companies to Bilbao. Bread maker Bimbo has registered its business in Madrid while brewers San Miguel have opted for Málaga.
In addition, a number of other companies, including cava maker Freixenet and supermarket chain Lidl, say they will also move their headquarters out of Cataluña if independence is finally achieved.