TOP LEVEL: Spanish Economy Minister Luis de Guindos (middle) is greeted by Eurogroup chairman Jean-Claude Juncker (left) and IMF chief Christine Lagarde at the Eurogroup meeting in Brussel. Picture: REUTERS
TOP LEVEL: Spanish Economy Minister Luis de Guindos (middle) is greeted by Eurogroup chairman Jean-Claude Juncker (left) and IMF chief Christine Lagarde at the Eurogroup meeting in Brussel. Picture: REUTERS

Madrid — Spanish economy minister Luis de Guindos has ruled out any sort of mediated talks with separatist leaders and said Catalan banks have signaled they may move out of the region if the push for independence continues.

Speaking on Thursday in a Bloomberg Television interview, De Guindos slammed the Catalan administration for its illegal actions and said independence is out of the question. Spain has nothing to discuss with the secessionists until rule of law is restored, he said, adding that the instability may persuade Catalan banks to move out of the region.

"They have indicated that if this process goes on, they are totally open to relocating their headquarters to other places in Spain," de Guindos said. "This is a clear indication of how insane the regional government of Catalonia is."

Banco Sabadell, Spain’s fifth-biggest bank, has said it will hold a board meeting on Thursday to discuss whether to shift its registered headquarters away from Catalonia due to leaders’ threats to declare independence. The Catalan lender, the second-biggest bank in the north-eastern region of Catalonia, convened a board meeting after its stocks plunged as the political crisis between Catalonia and Madrid intensified.

A board meeting scheduled for 3pm GMT on Thursday and a possible shift of domicile "is one of the subjects that will be discussed and will be decided", a Sabadell spokesperson said. Alicante, further down Spain’s eastern coast, is the most likely destination.

Sabadell shares, down 10% since September 27, jumped 3.5% on the news.

Managers at Barcelona-based CaixaBank’s private banking unit in Madrid have been proactively calling customers to discuss the situation in Catalonia and dispel concerns, according to one client, who asked not to be identified discussing the matter.

This is a clear indication of how insane the regional government of Catalonia is.

To help protect clients, CaixaBank is considering a temporary move of its legal domicile to the Balearic Islands if plans for independence go ahead, newspaper El Mundo reported on Thursday.

De Guindos, who helped steer Spain through its European bank bailout in 2012, was asked whether there have been deposit outflows from Catalan branches, and said the banks are solvent and executives know what to do to protect their clients.

On Wednesday night, Catalan president Carles Puigdemont called for outside mediators to help broker a settlement with the Spanish government and said the regional government in Barcelona will soon apply the results of Sunday’s makeshift vote. He stopped short of saying how or when he would trigger the process to leave Spain.

De Guindos said: "This is not a question of arbitration or mediation, it is a question of a government that has to enforce the law. There is nothing to negotiate without the full respect of the rule of law."

The prospect of secession is piling pressure on Spanish Prime Minister, Mariano Rajoy, and his minority government, and unnerving Spanish financial markets. The premier has been seeking cross-party political support for his hard-line approach after police stormed polling stations and triggered mass demonstrations. The next move could involve suspending the regional government and implementing direct rule from Madrid.

Spanish markets were calmer on Thursday with stock, bond and euro trading reflecting less tension than earlier this week. The IBEX 35 stock index rose 0.7%, recovering some of Wednesday’s 2.9% slide. The 10-year sovereign bond yield spread to similar German debt narrowed three basis points for its first drop in four days, as the Spanish treasury had an over-subscribed debt sale. The euro edged higher for a third consecutive session.

Bloomberg and AFP

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