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IBERIAN DAILY 21 JANUARY (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, BANKING SECTOR, GLOBAL DOMINION, IBERDROLA, SIEMENS GAMESA.

MARKETS YESTERDAY AND TODAY

Slight drops in a session with little volume traded and the US market closed
Most European indices fell slightly in a session without significant catalysts and with the US market closed. Within the Euro STOXX, Telecoms and Insurance led gains, whereas Retail and Leisure saw the biggest drops. On the macro side, the IMF cut its global growth forecast for 2020 to 3.3% from 3.4%, where we highlight Spain, which drops to 1.6% for 2020-21 from 1.8% and 1.7%, respectively. In the euro zone, C. Lagarde plans to present a plan for the coming years in which the inflation targets could be revised and climate change might increase in importance. Separately Macron and Trump have reached a truce regarding the digital tax until the end of 2020. In Japan, the BoJ meeting led to an unchanged monetary policy, but the GDP’20 was raised to 0.9% from the previous 0.7%.
What we expect for today
European stock markets would open with drops of -0.5%, dragged down by the leisure and consumer goods sectors due to fears over the SARS coronavirus (transmitted between humans) in China. Currently, S&P futures are down -0.39% (the S&P 500 closed +0.16% higher vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 12.10%). Asian markets are falling (Japan -0.91% and Hong Kong -2.54%).
Today in the UK we will learn December’s ILO unemployment rate, in Germany, the ZEW economic sentiment index for January. In debt auctions: Spain (€ 2 Bn of 3M and 9M T-bills) and Germany (€ 4 Bn of bonds due 2021).

COMPANY NEWS

BANKING SECTOR
A court in Badajoz has put a question to the ECJ regarding who should pay mortgage costs stemming from a collective suit filed by Adicae. Note that following the controversial decisions made by the Supreme Court in Nov’18, this was included in the new mortgage law and a Royal Decree was approved, supporting the Supreme Court’s decision on a new share out of the costs whereby management and notary costs are shared between the signer and the bank, the stamp duty is paid by the bank and the home’s appraisal is paid by the mortgage signer. This cost distribution is already applied on loans made since November 2018 but does not affect mortgage loans sold previously (that is, there is no retroactive effect). However, the preliminary ruling, coming after other two in the CJEU made in 2019, questions the distribution of agency and appraisal costs, and more importantly, questions whether there should be retroactivity, given that the clause might be abusive and therefore null and void. Negative news since we think that again pressures related to the stamp duty and the mortgage expenses that seemed to be over could arise again. Having said this, and with regard to retroactivity, we remind you that of all the mortgage formalization expenses, the highest amount corresponds to the stamp duty, where the banks act as collectors on behalf of the Government so the final responsibility would fall on this lasta. In the worst case scenario, which we see very unlikely, that the bank had to return 100% of the expenses paid, we calculated an impact on CET1 of c.- 55 / -100 bp, with BKIA, BKT of the most affected (c .-100p.b.), and of c. -70p.b,. In CABK, LBK and UNI. In any case, we believe that, as in the IRPH risk, the resolution of the preliminary ruling may take more than one year.