The clandestine role of the Spanish government in a run on deposits that drained €29 billion from Catalan banks.
Just over a year has passed since over two million people in Catalonia voted in a banned referendum to leave Spain. On that day, the separatists were given a brutal lesson in the raw power of state violence. Days later, they were given another harsh lesson, this time in the fickleness of money. Within days of holding the vote, which was brutally suppressed but not prevented by Spanish police, Spain’s north eastern region was forced to watch as one after another of its brand names moved their headquarters, at least on paper, to other parts of Spain.
Among the first companies to up sticks were Catalonia’s two largest banks, Caixabank and Banco Sabadell, which feared being cut off from European Central Bank funding in the event, albeit unlikely, of Catalonian secession. That would have meant no more virtually interest-free loans from the ECB or access to Europe’s repo markets. In other words, a death sentence, as Caixabank’s then president Isidro Faine recently admitted.
The banks were also suffering a gathering run on deposits as customers shifted their money to other Spanish banks, either because they were afraid of what could happen to their funds in the event of independence or as punishment for the banks’ Catalan roots. In little more than a week, the two banks lost tens of billions of euros in deposits.
But what is only now becoming clear is just how central a role the Spanish government in Madrid was playing in fomenting this massive exodus of funds…