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Catalonia and the Spanish banking system

As tensions rise around Catalonia’s independence movement, there are worries about the impact on the Spanish banking sector.

Banks based in Catalonia account for around 14% of total assets. Some major institutions are already moving their headquarters to other parts of Spain. However, most Spanish banks have significant exposure to the Catalan market, and all could be caught up in the turmoil.

The recent turmoil in Catalonia is raising concern across Europe. Foremost is, of course, the desire for a peaceful solution to the dispute. But there are also major worries around the Spanish banking industry. The two largest banks headquartered in Catalonia, CaixaBank and Banco de Sabadell, have are already making plans to move their headquarters to the Balearic Islands and Madrid respectively. So, how are banks based in Catalonia affected by this crisis?

In this blog post, I present a statistical overview of  the Spanish banking system. To get a better idea of how big the Catalonian banking sector is compared to the rest of Spain, we use data provided by SNL. This  covers 87 financial enterprises, including different types of banks, credit cooperatives and public financial institutions. The balance sheet size in terms of the total assets owned by the top 20 banks in Spain can be found on the table below.

Among 85 Spanish banking industry institutions (for which SNL provides data on total assets), 6 are headquartered in Catalonia. Their share in assets of the Spanish banking system is about 14% (Figure 1).

The Catalonia-based financial institutions include the two largest Catalonian lenders: CaixaBank and Banco de Sabadell. Then come Institut Català de Finances, which is a public financial institution owned by the government of Catalonia, Banco Mediolanum SA, which offers personal banking services, Caja de Arquitectos S. Coop. and Caja Rural de Guissona SCC.

CaixaBank and Banco Sabadell have already been heavily affected by the political risks, as their stock prices lost some 5% recently. These two banks’ total assets represent a relatively significant proportion of the total assets of banks in Spain: 13.8%.

However, non-Catalan banks are also caught up in the Catalonian drama. In fact, many of the large Spanish banks have significant activities, including offices and lending, in Catalonia.

Moving headquarters out of Catalonia may help Catalonian bank preserve access to the ECB liquidity window if the situation escalates. But the exposure of all Spanish banks through their business with Catalonia will remain significant.

-YANA MYACHENKOVA

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