Banks Tremble in the Face of Political Uncertainty: A Look at BBVA’s Bold Move Amidst the Volatility
In Europe, political uncertainty is creating concerns for banks, particularly in Italy, Spain, and France. New taxes have been imposed on banks in these countries as punishment for increased profits, while the rise of populism in France is causing worry among investors. The shock announcement of parliamentary elections in France by Emmanuel Macron led to a flight from French banks as investors sought safer investments.
The final round of elections, scheduled for July 7th, is expected to empower either left-leaning or right-leaning spenders, further adding to the uncertainty. Macron had previously advocated for a more integrated banking market in an interview with Bloomberg but the recent election-related drop in France’s government debt has brought back memories of the euro-zone crisis.
This political volatility could potentially make European banks more inward-focused and less ambitious. However, Banco Bilbao Vizcaya Argentaria (BBVA) stands out as an exceptional case. The Spanish bank generates a significant portion of its profits from Mexico and Turkey where it is a major player despite the challenging economic conditions. In May, BBVA made a bold move by making a hostile takeover offer for Sabadell, a Spanish competitor demonstrating its ambition and willingness to take risks.
