The year 2018 is being disastrous for European banks. The index that measures the evolution of the 26 most important banks in the European Union accumulates a fall of 24% so far this year. The Spanish groups are not exactly exception. Santander leaves 26%, BBVA 28%, Bankia 30% and Banco Sabadell 34.4%. Overall, the six banks of the Ibex 35 have devalued by 45,780 million euros this year.
The causes are multiple. The bank with the worst performance in Europe, Deutsche Bank, is still hampered by doubts about the complex products of its balance sheet and its investment banking business. Italian banking has been dragged down by the challenge of the Transalpine government to the budgetary rigor demanded by the European Commission. And several of the large continental groups have been affected by doubts about the performance of their subsidiaries in emerging countries. This is the case of Santander and its strong presence in Brazil (which faces a crucial presidential election on Sunday) and BBVA, with its banks in Turkey and Mexico.
The Spanish singularity is the legal insecurity. The banking sector has been chaining judicial failures for five years: for the defective commercialization of financial products, for the ground clauses, for the undue payment of mortgage expenses and, now, for the possibility that the Supreme Court imposes the obligation of return to hundreds of thousands of customers the tax they paid when they formalized their mortgage.
"There is another open judicial risk that is less talked about. That the banks are required to return the money they overcharged by applying the IRPH reference instead of the Euribor to the mortgages. They could be 10,500 million euros, "explains Gonzalo López Eguiguren, an analyst at Mirabaud Securities in Spain.
1. Santander: Less touched by its status as a global bank
Santander has lost 5.6% of its value in the stock market since the ruling of the Supreme on the mortgage tax on day 18. Its decline is lower than that of the most domestic banks of the Ibex, although the value had already been a difficult year, impacted by the depreciation of the Brazilian real. The bank is quoted at a discount on the book value of 31%, a level similar to the Italian Intesa Sanpolo.
2. BBVA: The best raffle in the stock market judicial controversy
BBVA has suffered a lot in the stock market this year, especially due to its exposure to Turkey (with serious financial problems). Although in recent days, it is the Ibex bank that falls the least because of the controversy over the mortgage tax. The analysts of Citi have just raised to buy the value, to which they give a potential of 15% that they expect to begin to materialize after the presentation of results.
3. CaixaBank: Your loss in the year is 10%, the smallest
Despite being the bank with the largest market share in Spain, it is the one that best covers the stock market tempest for now. In 2018 only 10% falls, compared to drops close to 30% of other rivals. The entity has managed to strengthen its leadership in pension plans and insurance. The market received good quarterly results on Friday. For now, there will be no impact due to the mortgage tax.
4. Bankia: The heavy bill of its large mortgage portfolio
Bankia, along with Banco Sabadell, has been the bank that has suffered the most after the ruling of the Supreme Court that forces the sector not to collect the tax on mortgages from the client. Since Thursday, October 18, it has lost 10.6% of its value in the stock market. The analysts of Kepler Cheuvreux indicate to the bank like one of the most affected if the retroactivity of the measurement by its high portfolio is fixed ..
5. Banco Sabadell: The entity that has suffered most because of the Supreme Court ruling
Sabadell is among the European banks that performed worse in the year. It has lost 34.4% of its market value. To the domestic problems of the Spanish banking by the judicial uncertainty the computer and commercial complications of its main international subsidiary, the bank TSB of the United Kingdom, are added. The entity rose on Friday by 5.13% on the stock exchange after announcing results.
6. Bankinter: the only one that is listed above its book value
Bankinter is the only bank that quotes without discount on its book value. Its capitalization is 41-% higher than that recorded in its accounting. The entity has demonstrated profitable growth in all its business lines. In addition, experts indicate that if the Supreme imposes the retroactivity of the tax on mortgages, its impact on Bankinter would be very limited.