Stampede on as Catalonia’s firms flee to safer climes
Nationalists react with fury as household names and banks move headquarters after independence vote
THE flight of banks and top corporations from Catalonia is turning into a stampede as the Spanish state tightens the garrote on the rebel government in Barcelona, exposing the desperate weaknesses of the independence movement.
Gas Natural, Spain’s top gas and electricity group, is drawing up contingency plans to relocate its headquarters as the Catalan “Generalitat” threatens to declare unilateral independence next week. The infrastructure giant Abertis is taking similar steps, as is insurer Catalana Occidente, and the sparkling wine group Freixenet, so popular among British consumers. “Independence is no joke. It’s a true catastrophe, a non-starter,” said José Luis Bonet, Freixenet’s president.
“People are getting frightened. I think it is time for the politicians to stop gazing at their navels and think about the citizens they are supposed to serve.”
Catalonia’s biggest bank, Caixabank, – the largest internal lender in Spain by branch networks – held an emergency board meeting yesterday to switch its legal registration to Palma in Majorca, where it first began as a pension and savings bank in 1904.
The Spanish government has rushed through an executive decree allowing decisions to be taken without a vote by shareholders, effectively rewriting the laws of commercial governance on a whim. “It is very sad to see important companies leaving Catalonia. It is not their fault: it is the fault of those generating this worry,” said Luis de Guindos, Spain’s finance minister.
The legal legerdemain has prompted fury in Barcelona. Oriol Junqueras, Catalonia’s vice-president, accused Madrid of trying to orchestrate an exodus of companies and foster generalised panic through a strategy of economic, legal, and political strangulation. He insisted that the corporate defections were “temporary”.
“There will not be a flight of companies. We have heard these sorts of forecasts many times and it never actually happens,” he said. It remains to be seen whether the Catalan people still believe such assurances as household names and icons of Catalan prosperity all rush for the door.
Catalonia’s second biggest lender, Sabadell, agreed to relocate its headquarters to Alicante on Thursday after 136 years as the pillar of Catalan industrialisation. It was careful to state that this shift would not necessarily lead to job cuts in Catalonia. It is not yet clear how many corporate transfers are simply “brass plate” switches.
The precautionary action by the two banks ensures that they will maintain unfettered access to the liquidity window of the European Central Bank, heading off a potential deposit flight and a bond rout on financial markets.
Their top executives have been in daily contact with the Bank of Spain, Spanish premier Mariano Rajoy, and King Felipe VI. Neither bank is in good shape. Both are still struggling to meet tougher rules on capital adequacy and to work off non-performing loans dating back to the property crash and the post-2008 economic depression. Spain has been enjoying a V-shaped recovery for the last three years but the legacy damage runs deep.
This week’s drama shows just how hard it is for a separatist region to safeguard its financial system when debts are in hard currency beyond its control – in this case euros – and it has no lender-of-last resort. Those companies announcing relocations – or intentions to do so – have seen an instant surge in
share prices. Oryzon Genomics, the telecom group Eurona, the payments company Service Point, Dogi lingerie, and Proclinic orthodontics, have all joined the rush. The car manufacturer Seat, owned by VW, has dismissed reports that it is planning to leave Catalonia as baseless “rumour”, although this was not a categorical denial.
The early bounce for Caixabank and Sabadell is already fading as the deeper issues resurface. The long-term showdown between Madrid and Barcelona is far from over, even if the separatists fall short this time.
There are already calls from Leftwing separatist groups for a boycott of the “traitor” banks. The International Monetary Fund warned yesterday that a prolonged dispute could start to damage the Spanish economy as a whole. Mr de Guindos revealed this week that one unnamed multinational car maker had frozen a large investment in Catalonia pending the outcome of the dispute. In this case it is not switching the operations to the rest of Spain. It is a net loss to the Iberian peninsular.
For Catalonia’s leadership, it is a bitter awakening. Spain’s top court has issued a writ prohibiting the Catalan parliament from meeting on Monday even to discuss a declaration of independence. There is little doubt that Spain will invoke Article 155 of the constitution and seize control of Catalonia immediately if the rebels press ahead with independence next week. The Barcelona Autumn of 2017 already seems to be slipping away. Catalan nationalists will have to bide their time.