IMF: 'Fluid' situation for banks after Catalan declaration

The International Monetary Fund said Wednesday that the situation for banks in Spain remains unsettled after Catalonia's declaration of independence from the country.

With banks and companies in the economically rich northeastern region hedging their bets over the future of the rebellious region, the IMF said overall the Spanish banking system was resilient.

"The situation remains fluid so we won't speculate. We do hope that the situation can be resolved," said Matthew Jones, assistant director in the IMF's Monetary and Capital markets Department.

On Tuesday Catalan leaders signed a declaration of independence from Spain, but immediately put it on hold and called for talks with Madrid on the country's worst political crisis in decades.

The prospect of an independent Catalonia has already prompted two major banks -- Sabadell and CaixaBank -- and other listed firms to move their registered headquarters to other parts of Spain.

Despite the turmoil, IMF officials said overall Spain's banks are stable, based on a very recent assessment by the Fund.

"We have generally found the Spanish banking system to be resilient and to be strong, having addressed most of its legacy issues. The outlook for the Spanish economy is strong," said Tobias Adrian, director of the Monetary and Capital Markets Department.

On Tuesday Maurice Obstfeld, the IMF's top economist, expressed concern over the Catalan move.

"The situation in Spain is, indeed, concerning as it causes a lot of uncertainty both for the Catalan economy and for the Spanish economy," he said Tuesday.

He warned of potential "spillovers" to Portugal and other countries in Europe if the two sides cannot smoothly resolve their differences.

"We can only hope that the parties do not act precipitously [and] negotiate."

source: AFP