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6 Oct, 2017 12:11

Spain passes law making it easier to move business out of Catalonia

Spain passes law making it easier to move business out of Catalonia

Spain's fifth-biggest bank, Banco Sabadell has announced it will move its headquarters from Catalonia following threats by the region's political leaders to declare independence. Two million Catalans voted to break away from Spain in last Sunday's referendum.

The Spanish government issued a decree on Friday making it easier for companies to move their legal base out of Catalonia.

Sabadell said its board decided to shift the company’s legal base to Alicante in southeastern Spain "in order to protect the interests of our customers, shareholders, and employees."

The move to Alicante wouldn't involve the transfer of any employees, according to the bank.

The 135-year-old bank has corporate and operational centers in different cities in Spain and the United Kingdom.

Banco Sabadell added that it wanted to operate "under the supervision of the European Central Bank and the regulations of the European Banking Authority," something that could be removed were Catalonia to declare independence.

The EU’s rules provide rescue for unstable banks to protect their customers within the bloc. If Catalonia does succeed in breaking away, it could be shut out of the EU and its system of banking regulation.

The bank's stock has risen four percent on the relocation news after an almost ten percent crash this week.

According to Reuters, Spain’s other major financial institution CaixaBank which accounts for about half of Catalonia's banking sector will meet to consider a similar move.

British newspaper The Independent reported, citing unconfirmed sources, the government decree was designed specifically for Caixabank. The ruling makes it possible for the bank to transfer its legal and tax base out of the region without holding a shareholders' meeting.

In the past few months, some companies have already moved outside the region or announced similar plans.

Energy company Gas Natural is expected to discuss on Friday whether to move its legal base from Catalonia.

Volkswagen briefly halted production on one line at its Seat plant in Catalonia when protests disrupted parts supply.

Nestle's instant coffee plant in Girona was also affected.

Dutch paint maker Akzo Nobel, which has several facilities in Catalonia, said it was monitoring developments in the region.

“This is the result of an irresponsible policy that is causing uneasiness in the business community,” said Spain’s Economy Minister Luis de Guindos.

The European Union has already said it won’t recognize an independent Catalonia.

Spain's constitutional court has suspended next week’s session of the Catalan parliament, to pre-empt a possible push for independence.