Is it wise to save and invest in a Catalan bank?

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The events that are taking place in Catalonia are alarming a large part of the users who have their money in Catalan banks. To the point of being planted if you can risk your financial assets. Well, so that there are no alarms of any kind, there will be no choice but to differentiate clearly what is your relationship with these financial entities. Si como mero Username de sus productos (cuentas bancarias, tarjetas de crédito o débito, depósitos a plazo o plan de pensiones). O si por el contrario, su conexión es mediante operaciones de capital en alguno de estos grupos financieros.

Depending on these important variables, you should worry more or less from now on. But you must not forget that in a globalized world the repercussions of these events will be very limited. This is something that you should know from now on so that you do not panic and can perform some other bad operation. Or even change banks unnecessarily. For not knowing the consequences of these events in Catalan banking. Where are the most representative Banco Sabadell and Caixabank. In both cases, they are listed on the selective index of Spanish equities.

To this end, and to reassure the many clients that these credit institutions have, it is important that you know that they have a contingency plan outlined in the event that independence is proclaimed in the coming days. This program involves traveling to other cities in the Spanish geography and continuing with its commercial and financial activity. Then again, they would still be in the area under the mandate of the European Central Bank (ECB). For your relationships not to suffer any type of alteration, you would not even have to have for your savings in this feasible scenario that may arise.

What will happen to the Catalan situation?

The most common question among customers is what will happen to their savings. Mainly with the money kept in checking accounts or time deposits. Well, it would not be any important news and you would have guaranteed all the contributions you have made so far. Among other reasons because the savings would be protected through the Spanish Deposit Guarantee Fund. In other words, as it happened to you in another Spanish bank, as in the cases of BBVA, Santander, Bankia or any other.

In the case of having a debt contracted with Catalan financial institutions, such as through a line of credit or contracting a savings program, it would be precisely the same. Or said in other words your interests will be defended until the end. With the small variations that may be generated with respect to the money invested or the interest rates that are applied from these financial groups. In this way, it should not have serious consequences for the protection of your savings. Beyond a logical nervousness during these days.

Catalan bank: investor's vision

Another very different thing is if you play the role of investor in one of these banks. Because in this case, you can lose money in equities, as is happening these days. Where the Catalan bank it is losing just over 5% in the financial markets. A procedure that, in any case, may become more acute in the near future if Catalonia separates from the Spanish state. To this end, entities could suffer from this serious situation. With even stronger depreciations that could even test the downtrend in the coming months. With a more than latent risk so that handicaps are permanently installed in your portfolio.

But beyond these logical reactions, you shouldn't be afraid for your money. Not even if you are a small and medium investor. Because it is also foreseeable that in the medium and long term they will recover their price level. To this end, and in the face of the most aggressive investors, it could be considered a long-term purchase possibility. For a very convincing reason, and that is that their shares could be bought at heavy discounts, which would have nothing to do with the real results of these companies. But due to factors exogenous to the economy itself.

Impact on the stock market

Tampoco se esperan fuertes caídas bursátiles si se alcanza este preocupante escenario. Más allá de unas potentes correcciones en la cotización de sus precios. Que es cierto que a corto plazo puede perjudicarte con gran intensidad y es algo que debes anticipar de ahora en más. Para evitar estas situaciones, la mejor strategy de inversión pasa necesariamente por abstenerse de tomar posiciones en estos valores. Cualquier banco catalán cotizado puede estar sujeto a la supplier operations. Or even with great aggressiveness and absent from these very dangerous movements at this time.

Sea cual sea el caso, otra esperanza reside en que tras la celebración del referéndum las acciones de Sabadell y Caixabak no han caído de forma espectacular, como auguran algunos expertos en los mercados de renta variable. En la medida en que el comportamiento de las acciones de Caixbank esté siendo frankly positive so far this year. It cannot be forgotten that it is the best value of 2017 of those that appear in the national selective index. Above other financial entities at the state level. While Banco Sabadell's positions have depreciated somewhat more than the 5% in this period. But reasons unrelated to the procedure for distancing Catalonia from national institutions.

What if they had a new currency?

If this scenario is consummated, one of the main repercussions will be the creation of a new currency in Catalonia. If this were a reality, there would be an undeniable reality that would translate into a strong devaluation of it. What effect would it have on users? Well, very simple, that the savings of the customers they will be depreciating and therefore its value would be less than until now. Both with regard to the liquidity of checking or savings accounts. But also to the monetary contributions deposited in time deposits or bank promissory notes.

Nor is it ruled out that the so-called corralito has been installed, with problems for withdrawals of credit institutions, both in bank branches and ATMs. Another effect that could generate a massive flight of capital to other safer destinations. But in any case, all these consequences would occur in the most negative scenarios of what could happen in Catalonia. Even though it is part of a more complete analysis in which all possible scenarios are taken into account. So that investors can make the decision to preserve their personal assets.

Repercussions in the rest of Spain

The effects of these events in the national territory would not be as acute as in Catalonia. Its worst element is a foreseeable fall in national stock markets. With depreciation in most of the stock market proposals, especially in financial groups. Another parameter to be very attentive to is the evolution of the risk premium. Which in this case may be affected and even visit 200 basis point levels or even go to much more dangerous levels. It is one of the most damaging factors for the Spanish economy.

Where the emotional aspect is the worst scenario that can occur with this new situation in the political landscape of Spain. Where, anyway, business opportunities will be generated in the financial markets. Not just stocks. But in addition, multiple financial instruments and even opt for financial assets that act as a safe haven in the most unstable scenarios. To this end, you will have no choice but to have some liquidity to take advantage of the purchase operations that are presented from now on.

Reduce investments in the stock market

However, it is best to decrease your exposure to the equity markets. Or at least take positions in the more stable stocks in the stock market and if they act as a safe haven security, then all the better to protect your investment interests. Because you don't doubt that volatility will return and perhaps to settle for a long time in the national markets. To this end, a good investment option can be based on hiring an investment fund of these characteristics. Where in all probability you will earn a lot of money if the panorama in Spain heats up.

It is a totally unprecedented scenario in our country and one in which you have to be very careful to perform any type of movement. It is preferable to wait a few weeks until the image clears one way or another. As we might expect, your savings account balance will greatly appreciate it.