The departure of investors coincides with a good stock market year for the sector, which will benefit from the improvement in the dividend to regain their confidence
Flight of shareholders in the Spanish banking system. Neither the expectation of higher earnings due to the rise in interest rates nor the improvement in profitability have managed to halt a trend that, while variable, points to a clear investor exit from the sector in recent years.
The six major 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 presented by the banks 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 industry away from the six million mark it last reached in the third quarter of 2020.
This evolution has led many investors to miss the strong recovery entities have been experiencing in the stock market in recent times, after the worst of the pandemic passed nearly three years ago.
At the time, it seemed more understandable that shareholders would leave en bloc an industry forced to multiply its commissions indefinitely, with a very negative impact on its bottom line.
Nor did they have the incentive of dividends in a context where the European Central Bank (ECB) enforced the suspension of cash payments and share buybacks to protect capital and where entities are scrambling to extend credit.
The funny thing is that the current scenario is completely different. After the recovery on the stock market in 2021, the major banks also had a good year in 2022, in the heat of the battle of interest rate rises, which were very positive for their business. So much so that entities like Santander and BBVA have achieved unprecedented results. And the combined profit of the six big shot to 20,800 million, 28% more.
But not for that one. CaixaBank was the entity that lost the most members last year: 45,651 in total, who lost part of their 52% revaluation on the stock exchange.
The situation is repeated with Banco Sabadell, which lost 9,822 investors despite also being one of the stock market stars of the year, with a cumulative increase of 48%. Partner bleeding was even bigger in BBVA, with the flight of 25,619, while Banco Santander lost 21,534 shareholders in a year when the entity returned 4% on the stock exchange in this case.
The bank led by Ana Botín currently has 3,915,388 shareholders, further and further away from the four million mark 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 industry presence in their portfolios, remind that this is not the first time this anomaly of investors exiting in a favorable environment has occurred. But they also point to some factors that may explain some reluctance to stay with or join the Spanish bank this year.
For one thing, they point to a certain relative resentment of national entities with the major European banks, which are not as exposed to the political focus that currently surrounds the industry in the country. They also believe that the new tax approved by the government – with a cost that will be around €1,100 million for these six entities – puts them at a disadvantage compared to others. The bankers themselves have repeatedly called it “discriminatory”. And the same happens with the doubts about the provisions that should be applied if some proposals are implemented to help the mortgagee.
Uncertainty is never good in the stock market and, faced with this situation, entities have resorted to the most important claim a publicly traded company can offer its shareholders to win back their favour: dividend attractiveness. For example, BBVA will increase its cash payment by 39%, which will be the most generous in the past 14 years, in addition to announcing a new share buyback plan.
In total, it will allocate some 3,000 million for shareholder payments. Sabadell also increases the ‘pay out’ (percentage of the profit that goes to the dividend) from 31.5% to 50%. And Santander is likely to announce a similar move at the next Investor Day, which is celebrated at the end of February.
After years of adjustments, staff cuts, branch closures due to bank restructuring in the country, the major national entities seem to have got it right.
According to the annual financial reports, the number of employees in the sector increased by 6,361 people throughout the year. It should be borne in mind that the data corresponds to all regions in which it operates, not just Spain. But the trend is clearly upwards.
From the sector, they attribute this evolution to the fact that, despite the personnel adjustments, more personnel have been hired recently to cover the new profiles needed to make progress in the digital transformation of the sector. And it is that this revolution has led to an increased demand for new equipment with a high knowledge of mathematics, engineering, cybersecurity or information technology.
Entities are also looking for profiles that are more focused on regulation and regulatory compliance and, above all, have extensive knowledge of sustainability and corporate social responsibility.
Santander and BBVA, with the largest international presence, are the entities that have expanded their workforce the most in 2022, with 7,300 and 5,200 employees each. Bankinter, for its part, added 281 employees. 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, laid off 210 employees during that period.
Due to the digitization of the sector, the number of branches has also decreased further in the past 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, other than those that may result from the merger of CaixaBank with Bankia and Unicaja with Liberbank. But the improvement in revenues from the rate hike, coupled with these years of restructuring in which it has been decided to scrap traditional branches to make way for larger firms with a strong consultancy focus, anticipate a lower need to cut costs via.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
