finances

BBVA will pay €1.187 billion to the Fund for Orderly Bank Restructuring (FROB) for the nationalised Catalan bank, beating the other two offers in the final phase of the auction process presented by Santander and Barcelona-based CaixaBank. This means that Spanish taxpayers will lose €11.84 billion considering guarantees and due to the fact that the Spanish Government injected €12.622 billion into Catalunya Banc since it was nationalised in 2011. Catalunya Banc was a private bank owned by CatalunyaCaixa, the merger of three historical Catalan savings banks (Catalunya, Tarragona and Manresa). It could not face the deep restructuring process required to meet the new banking regulations. The bank had a weak financial position resulting from a high exposition to toxic real estate and mortgages assets, as well as suffering from poor management. The BBVA will become the second largest bank operating in Catalonia, doubling its past position.

CatalunyaCaixa (CX) on Thursday confirmed the sale of its portfolio of high risk loans to US investment company Blackstone, consisting mainly of mortgages with a nominal value of €6.392 billion and provisions of €2.205 billion. The transaction involved the transfer of funds to a portfolio of asset-backed securities for an amount equal to its book value, €4.187 billion, with €3.615 billion supplied by Blackstone and Spain's public Fund for Orderly Bank Restructuring (FROB) providing the remaining 572 million. With this divestment, the CX solvency ratio stood at 14.9% and coverage stands at 81.6%. After this sale, the liquid assets of CX will reach €16.848 billion and the company is now ready to face its full privatisation, after it was nationalised in 2012.  In addition, Blackstone had already bought CX's real estate business in June in a €40 million operation.

The Catalan Government, alongside the executives of the Basque Country and Castile and León, is leading the index of Autonomous Communities in terms of transparency, according to a study issued on Thursday by the organisation Transparency International Spain. These three Autonomies scored 100 out of 100 in the study, which was based on 80 indicators. They were followed by La Rioja (96), Galícia (94) and the Balearic Islands (93). The Region of Madrid occupies the last position in the ranking, with 65 points, behind the Region of Múrcia (79), the Canary Islands (80) and Castilla-La Mancha (84). The average across Spain is 88.6 out of 100. The study called upon regional governments to indicate the exact location of various data and information about elected officials, political appointments, organisation and personal wealth.

The Catalan Government approved on Tuesday a measure to impose a tax on empty flats owned by financial institutions. The aim of the tax is to incentivise banks to rent out the empty homes. Santi Vila, the Catalan Minister for Planning and Sustainability, said that the "mere announcement" of the tax has already caused Sareb [Spain's public 'bad bank'], Catalunya Caixa and Bankia to yield to the Government 1,230 apartments for social rent. During the press conference after the weekly Cabinet meeting, Vila pointed out that the new tax will not apply to individuals and will only be intended for flats that have been taken out of the market for more than two years. The Minister also said that the measure is not simply about "tax collection" but is instead to ease the access to housing market in the midst of a housing crisis.

Barcelona has gone from 22^nd to 7^th place in the list of 468 European cities with the best economic prospects; it is ranked the 19^th most competitive city in the world and the 10^th in Europe; it stands at 10^th in the world in terms of receiving new business investments; and it became the 4^th city hosting the largest amount of congresses at world level. The report was produced by the Chamber of Commerce of Barcelona in collaboration with the City Council. Furthermore, another study compiled by ESADE business school stressed that Barcelona is the 1^st European city in money spent per tourist in shopping, ahead of London and Paris. The Mayor of Barcelona, ??Xavier Trias, welcomed the news but also emphasised the ''shadow'' of having more than 100,000 unemployed in Barcelona, a number he finds “unbearable.”

Sabadell United Bank, the US subsidiary of Catalan Banc Sabadell, has strengthened its position in Florida, purchasing JGB Bank of Miami for 49.6 million dollars (€36.45 million). The Catalan company, chaired by Josep Oliu, has informed the Spanish Spanish Stock Market Authority (CNMV) about this operation on Monday. With the integration of JGB Bank, Sabadell United will become a benchmark in the U.S. state of Florida with a total of 40,000 clients, a turnover of close to 8,000 million dollars (€5,876 million) and 27 branches. The operation began in December and now, in July, the bank has received the necessary authorisation from regulatory bodies within schedule.

The Barcelona-based bank, which was totally nationalised in December 2012 and received a €9.08 billion bailout, has made profits of €532.2 million in 2013, which would represent €167.8 million without the extraordinary profits. In 2012, CatalunyaCaixa posted losses of €11.86 billion. In 2013, the operational costs were reduced by 13.1%, having drastically reduced the number of employees and branches. The bank's capital ratio is now 14.36% and the main capital following Basel III criteria reached 12.3%, which represents liquidity of €15.01 billion. With these figures, the Spanish Government is in a better position to sell CatalunyaCaixa, which forecasts profits also for 2014. This company was the result of merging the banking business of 3 savings banks in 2011: Caixa Catalunya, Caixa Tarragona and Caixa Manresa, which disappeared after a long tradition of social work. The operation was part of Spain's restructuring of the banking sector.

The Spanish Finance Minister, Cristóbal Montoro, announced on Friday that the publication of the so-called fiscal balances will be delayed until June, after he had promised to issue them by last December and by the current month of March. Montoro changed the calculation method in January, as the figures were used to support Catalonia's independence from Spain. Now, the new delay is "to improve" the report. This document shows how much money Catalan citizens and companies pay to the public authorities and how much returns to them through services, infrastructure and funds. A wide majority of the Catalan society has been complaining for decades that their contribution to finance services, infrastructure and funds in other parts of Spain is too excessive and they have asked for reducing such inter-territorial money transfers. Studies show that Catalans have been paying each year an average of 8% of Catalonia's GDP between 1986 and 2010, which represents 200% of Catalonia's total GDP.

In Catalonia, direct foreign investment – excluding the stock-exchange –grew by 31.5% year-on-year to reach €3.51 billion in 2013, as indicated by a report from the Spanish Ministry of Economy and Competitiveness. According to the Foreign Investments Registry, with such a figure, Catalonia achieved its second best year in history, only surpassed by the €4.82 billion received in 2010. Besides, Catalonia accounted for 22.2% of all foreign investments in Spain in 2013, which amounted to a total of €15.81 billion, meaning 8.8% more than the previous year. The region of Madrid was the leading Autonomous Community in Spain for foreign investment attraction, receiving €8.64 billion, which is it to say 54.6% of the total amount. However Madrid's sum also represents a 7.1% decrease on 2012 figures.

Barcelona’s City Council has achieved a cumulative budget surplus of €23.5 million for the last few years, after posting a budget surplus of €139.3 million in 2013. In a press conference on Wednesday, the Deputy Mayor for Economy, Business and Employment, Sònia Recasens also announced that the city had eventually executed 97.55%, (€2.25 billion) of its planned expenditure. Such a figure is higher than the average execution ratio for 2009-2013. The execution ratio for investments amounts to 94% (€356 million) and is also significantly higher than in 2009-2013. In addition, debt levels represent 46.7% of the annual ordinary revenue. Furthermore, the City Council paid its providers in 29.2 days on average. Thanks to these figures, the City Council will make available 1,000 new social housing units in Barcelona.

On Wednesday evening the main Catalan small- and medium-sized enterprises association, Pimec, organised a protest conference in which they accused the Spanish and Catalan Governments of politically and financially "discriminating" against them. With the slogan #diguemprou (#wesayenough) 1,400 owners of SMEs and self-employed workers protested against both Governments for not taking SMEs into account and only working for the interests of large corporations. The protest was explicitly backed by 220 guilds and associations, as well as by 9 professional associations and that of self-employed workers. The event issued a manifesto compiling a list of grievances, split into 7 different areas: entrepreneurship; loans and funding; taxation; labour market; energy; training and employment; and internationalisation.

On Tuesday the Barcelona-based bank, which is the largest financial entity within the Spanish market, attracted a strong €2.6 billion demand, 88% of which came from international investors. It was CaixaBank's 10-year mortgage covered bond first issue since 2007, before the financial crisis. The operation will boost the Catalan bank's liquidity position, which stood at €60.762 billion at year-end 2013, 17.9% of its total assets. In addition, it satisfies demand from institutional investors for this product. The issue price was 80 basis points over the mid-swap rate and better than expected thanks to strong investor demand. This means CaixaBank sold the mortgage covered bonds at an interest rate of 2.625%, 67 basis points below the last rate for a similar issue by the Spanish Treasury.

The Government of Extremadura, a region bordering Portugal, presented a study comparing its contributions to the rest of Spain with those of the other Autonomous Communities, particularly focusing on Catalonia. The main thrust of the report was that Catalonia receives the highest amount of money from the Spanish Government, which goes against absolutely all the previous studies that have established that Catalan taxes fund services, investments and infrastructure in the rest of Spain. The Catalan Finance Minister, Andreu Mas-Colell, characterised “the political document” presented by Extremadura’s Government as a “complete nonsense”. Mas-Colell, who was Professor of Economics at Berkley and Harvard from 1972 to 1995, said that the report lacked rigour and was not a technical work. The next day Extremadura’s President, José Antonio Monago, stated that Catalonia is “a privileged territory” and questioned whether it could repay its debt.

The Catalan Minister for Territory and Sustainability, Santi Vila, who is also in charge of housing policies, presented on Tuesday the draft of a new tax bill on empty flats and houses owned by financial institutions in Catalonia. During a press conference, Vila explained that such a tax is looking to be an “incentive” for banks to make available their 15,000 flats spread across 70 municipalities with “proven demand” for housing, mainly around Barcelona, Tarragona, Lleida and Girona, and which have been empty for more than 2 years without a justified cause. The amount of the tax will be based on the total number of square meters owned by the banks and will include significant accumulative bonuses if the institutions decide to rent their properties, notably for social housing. The Catalan Government estimates that banks own around 40,000 empty flats, including in areas with housing demand.

The new Tax Administration of Catalonia (called ‘Tributs de Catalunya’) has been launched on Thursday in a ceremony chaired by Artur Mas, the President of the Catalan Government. Mas highlighted that “all of this is not against the Spanish State” but “an investment for a better Catalonia”. The new body was created from merging the existing Catalan Government’s Tax Agency and the ones of the four Provincial Councils (Barcelona, Girona, Lleida and Tarragona). Its creation was already foreseen in the Catalan Statute of Autonomy approved by the Spanish Parliament and the Catalan people through a binding referendum in 2006. It will start with 53 branches, which will mostly deal with municipal taxes. Gradually it will dispose of up to 200 offices dedicated to ensure Catalonia’s fiscal sufficiency. The project was launched in September 2012, aiming to build “a state structure” that would ultimately be able to collect all the taxes generated in Catalonia if needed.