Flight of shareholders: the big bank lost 108,000 investors in 2022

Flight of shareholders in Spanish banking. Neither the expectation of higher profits due to the rise in interest rates, nor the improvement in profitability, have managed to stop a trend that, although variable, indicates a clear departure of investors from the sector in recent years.

The six large listed Ibex-35 companies (Banco Santander, BBVA, CaixaBank, Sabadell, Bankinter and Unicaja) said goodbye to 2022 with 107,708 fewer investors, according to the annual financial reports that the banks have presented these days.

Specifically, these entities had a total of 5,642,869 shareholders as of December 31, compared to 5,750,577 a year earlier, a year in which they already suffered the abrupt departure of more than 200,000. The data moves the sector away from the six million bar that it reached for the last time in the third quarter of 2020.

This evolution has caused many investors to miss out on the strong recovery that entities have experienced on the stock market in recent times, after the worst of the pandemic had passed almost three years ago.

At that time, it seemed more understandable that shareholders would abandon en bloc an industry forced to multiply its provisions infinitely, with a very negative impact on its results.

They also did not have the incentive of dividends, in a context in which the European Central Bank (ECB) forced the suspension of cash payments and share repurchases to protect capital and that entities allocate everything possible to give credit.

The funny thing is that the current scenario is completely different. After the recovery on the Stock Market in 2021, the big banks also had a good year in 2022, in the heat of the interest rate rises, which were very positive for their business. So much so that entities such as Santander and BBVA have achieved results never seen before. And the joint profit of the six big shot up to 20,800 million euros, 28% more.

But not for those. CaixaBank was the entity that lost the greatest number of members last year: a total of 45,651, who lost part of their 52% revaluation on the stock market.

The situation is repeated at Banco Sabadell, which lost 9,822 investors despite being another of the stock market stars of the year, with a cumulative rise of 48%. The bleeding of partners was even greater in BBVA, with the flight of 25,619, while Banco Santander lost 21,534 shareholders in a year in which, in this case, the entity yielded 4% on the Stock Market.

The bank chaired by Ana Botín currently has 3,915,388 shareholders, further and further away from the barrier of four million that it reached in its best days. The situation is repeated in Bankinter and Unicaja, with the loss of 2,500 and 1,500 shareholders each.

Sources from a national fund manager, with a strong presence of the sector in their portfolios, recall that this is not the first time that this anomaly of investors leaving in a favorable environment has occurred. But they also point out some factors that this year may explain some reluctance to remain or enter the Spanish bank.

To begin with, they point to a certain comparative grievance of national entities with the large European banks, which are not so exposed to the political focus that currently surrounds the industry in the country. They also consider that the new tax approved by the Government – ​​with a cost that will be around 1,100 million euros for these six entities – penalizes them compared to others. The bankers themselves have called it "discriminatory" on numerous occasions. And the same happens with the doubts about the provisions that would have to be applied if some proposals are carried out to help the mortgaged.

Uncertainty is never good on the stock market and, faced with this situation, entities have resorted to the main claim that a listed company can offer its shareholders to regain their favour: the attractiveness of the dividend. BBVA, for example, will increase its cash payment by 39%, which will be the most generous in the last 14 years, in addition to announcing a new share repurchase plan.

In total, it will allocate some 3,000 million to shareholder remuneration. Sabadell also raises its 'pay out' (percentage of profit that goes to the dividend) to 50%, from the previous 31.5%. And Santander is likely to announce a similar move at its next Investor Day, which it celebrates at the end of February.

goodbye to cuts

After years of adjustments, staff cuts, office closures due to bank restructuring in the country, the large national entities seem to have kept the scissors.

According to the annual financial reports, the number of employees in the sector increased by 6,361 people throughout the year. It must be taken into account that the data corresponds to all the regions in which it operates, not only in Spain. But the trend is clearly upward.

From the sector they attribute this evolution to the fact that, despite the workforce adjustments, more personnel have been hired in recent times to cover the new profiles that are needed to advance in the digital transformation of the sector. And it is that this revolution has meant a greater demand for new equipment with a high knowledge of mathematics, engineering, cybersecurity or information technology.

Entities are also looking for profiles more focused on regulation and regulatory compliance and, above all, with extensive knowledge of sustainability and corporate social responsibility.

Santander and BBVA, with the greatest international presence, are the entities that increased their workforce the most in 2022, adding 7,300 and 5,200 employees each. For its part, Bankinter added 281 workers. On the other side of the table was CaixaBank, with the departure of 5,063 employees, while Sabadell also reduced its workforce by 1,175. Unicaja, for its part, dismissed 210 workers in the period.

The digitization of the sector has also caused the number of branches to continue to decline in the last year. According to publicly available data, the big six banks closed 1,672 branches in 2022, bringing the total number to 22,017.

Looking ahead to 2023, no further adjustment processes are expected, except for those that may result from the merger of CaixaBank with Bankia and Unicaja with Liberbank. But the improvement in income due to the rise in rates, together with these years of restructuring in which it has been decided to eliminate traditional branches to make way for larger offices that are highly focused on advice, anticipate a lower need to cut costs for this via.