Investment banking? Never touch the stuff, Spanish bankers will tell you with glee. Only a few years ago, Deutsche Bank, UBS and the big US players with large investment banking arms might have sneered at Spain’s lower-margin, strictly retail operations. That was when the big hitters were earning huge fee income from mergers and acquisitions, derivatives and equity securities, to name but a few of the businesses at the high-risk end. In the wake of the 2008 meltdown, it seems that the likes of Santander and BBVA are having the last laugh.
“Spain’s big banks are able to compensate for the weak Spanish economy and the collapse of the property sector thanks to the diversification of their earnings in other countries,” says Carmen Muñoz, an analyst at Fitch Ratings in Barcelona. “In the case of those banks that are highly focused on Spain, such as Banco Popular or the leading savings bank La Caixa, their earnings are more correlated to the domestic economy.
