MADRID/FRANKFURT (Reuters) - Spanish banks stocked up on European Central Bank money at a weekly auction on Tuesday, fearing jitters on the funding market if Catalonia breaks away from Spain.
Investors, depositors and citizens in Spain are on tenterhooks as Catalonia’s regional leaders weigh up how to press an independence drive that could push the region out of the European Union.
Two sources close to the matter told Reuters Spanish banks were responsible for much of a larger-than-expected 21.3 billion euros ($25.1 billion) taken up at the ECB’s auction, as they sought to build a cash buffer in case the funding market seizes up for them.
The ECB, which declined to comment, does not provide data on how much individual banks or countries borrow at its auctions.
Catalonia’s biggest banks, Caixabank and Banco Sabadell (SABE.MC), and the Bank of Spain declined to comment.
Caixabank and Sabadell moved their legal bases to other parts of Spain following a referendum on Catalan independence on Oct. 1, ensuring they would remain under ECB supervision even if the region does decide to secede.
Yet some Catalan residents have been shifting their bank accounts to lenders and branches in other regions of Spain and the country’s borrowing costs have hit six-month highs since the vote.
The amount raised by banks on Tuesday was six times as large as what analysts were expecting and what banks borrowed at the previous Main Refinancing Operation (MRO).
This had quickly triggered market speculation.
“Catalonia seems the most likely reason for the rise in MRO usage,” Peter Chatwell, an analyst at Mizuho in London, said.
Two bank dealers who spoke to Reuters on condition of anonymity shared similar concerns.
The majority of Catalans did not turn out for the vote and the Spanish government declared it illegal, sending riot police to prevent people casting their ballots.
But secessionist leaders said the referendum had produced an overwhelming majority for breaking away from Spain and their leader was delivering a speech on Tuesday evening in which he could ask the regional parliament to vote on independence.
Reporting by Francesco Canepa, Giulio Piovaccari, Balazs Koranyi, Frank Siebelt and Andrea Lentz; Editing by Robin Pomeroy