Cathal Mcelroy

Analysts believe that selling TSB after closing a deal with Sabadell would align with BBVA's strategy in other geographies and free up capital to help cover some of the acquisition costs.

The severity of the disaster, which killed more than 220 people and caused over €10 billion of damage, underlined the potential threat Spanish banks face in the coming years as rising global temperatures fuel increasingly extreme weather events.

Structural shifts in the real estate sector, higher interest rates and imminent changes to bank regulations are casting doubt on the collateral value of European banks' commercial property loan books.

The Republican presidential candidate threatened to slap huge tariffs on vehicle imports from Mexico, a key market for the two Spanish banks, while a plan to end a tax credit for electric vehicle purchases would hit Santander's US business.

Buyers of distressed property debt predicted a flow of nonperforming commercial real estate loans to emerge in the coming years in Germany, Austria and the Nordics, with office buildings particularly affected, executives told a Barcelona conference.

Analysts expect the recent sharp rise in interest rates to have only a moderately negative impact on the asset quality of the largest banks in the region in 2024, S&P Global Market Intelligence data shows.

A Spanish government proposal to extend a recently implemented two-year bank windfall tax has raised the prospect of other European bank taxes lingering, further repelling already cautious investors.

Fourth-quarter bank earnings are showing the first effects of the changes to and imminent end of the European Central Bank’s €2.2 trillion stimulus program.

The latest increase to the Livret A rate to 3% from 2%, which takes effect Feb. 1, will add billions to French banks’ deposit costs in 2023.

The boost to the U.K.-based bank’s capital from its exit from Canada should leave sufficient surplus to be returned to stockholders through one-off dividends or buybacks.

Rising deposit expenses, limits on the rate charged for home loans, and changes to the terms of a European Central Bank funding scheme are all weighing on lending income prospects for BNP Paribas, Crédit Agricole and Société Générale.

Pressure on net interest income, rising expenses, and increasing provisions look set to weigh on profits at the country’s three largest listed lenders, BNP Paribas, Crédit Agricole SA and Société Générale.

Lenders are facing an increase in bad loans as rising interest rates hit landlords with higher debt costs, lower asset values and falling demand for space.

The Spanish lender aims to boost growth in Mexico through an increase in auto and credit card lending, CEO José Antonio Álvarez said during a second-quarter earnings call.

Lenders are relaxed about a possible move by the central bank to prevent them from profiting from the deposit of cheap funding intended for businesses and households, as an imminent rise in interest rates promises a major income boost.

The Spanish lender will announce details of a plan to restructure its American operations in the second quarter following a rush by regional peers to exit the market.

CaixaBank’s recent agreement with unions concludes a round of restructuring at Spain’s largest banks that has seen more than 14,000 jobs lost and the closure of thousands of branches.

The Spanish lender’s holding of excess capital and consolidation elsewhere will not be factors in its consideration of M&A opportunities, said Onur Genç.

Many of the banks dominant in the French, German, Spanish and Italian markets, where online banking growth has been hesitant, managed to reduce operating expenses during the pandemic as customers were forced to use digital platforms.

Analysts believe the Spanish lender will have to find further savings to improve its efficiency and profitability, which significantly lag that of its domestic peers.