Brussels and London they run again heading to the precipice of a no-deal ‘divorce’, that is to say, an exit of the United Kingdom from the block without the safety net of a commercial pact that will govern the relations between both parties from next January 1. British Prime Minister Boris Johnson said Friday that it is time to prepare for that possibility. He said it after the ultimatum given by the Twenty-seven in the Summit of Heads of State, in which they asked their government to give in on some points of friction if it did not want to conclude the negotiations. While both of them tighten the rope, a good handful of Ibex 35 companies, which represent practically half the value of the index (209,107 of the 449,490 million euros that it currently capitalizes) are gambling a whopping 30,800 million in income from the islands.
Of all of them, the most exposed firm is the airline holding company IAG, the parent company of Iberia and British Airways, and not only in terms of billing. 32.7% of its total sales depend on the United Kingdom (they are 8,362 million of the 25,506 that it billed in total last year), but its situation is even more uncomfortable, since the European Commission still does not have clear plans to maintain the flight license and to be able to operate in the community sky if this abrupt departure scenario occurs. Brussels demands that more than half of the shareholding is in community hands –that IAG guarantee its “Spanishness” – a premise that the group led by the Spanish Luis Gallego ensures compliance since this conflict began.
Also very exposed to this market is Ferrovial, which operates the Heathrow and holds a 50% stake in ASG -the aerodromes of Aberdeen, Glasgow y Southampton-. The multinational infrastructure company obtained practically a quarter of its sales on British soil last year (3,140 million out of a total of 13,044 million euros). In the Strategic Plan 2020-2024, that the company led by Rafael del Pino e Ignacio Madridejos introduced earlier in the year, he was confident the UK would remain relevant to his business after Brexit.
It is true that this roadmap was presented before the coronavirus crisis broke out, a ‘blow’ that has completely clouded the horizon both at the macro and business levels. The International Monetary Fund (IMF) warned that everything will depend on the evolution of the pandemic in the coming months and the adoption of new mobility and social distancing restrictions that for the moment already affect to some population centers in Spain, France, Germany and also the United Kingdom. Now, the possibility of a chaotic abandonment of the bloc by the British adds to this panorama adds more gasoline to the fire of uncertainty.
The bank, also attentive to the British issuer
Behind IAG and Ferrovial is Sabadell, the third most exposed Ibex 35 company in the islands through its subsidiary TSB, which contributes 1,091 million euros (22%) of a total gross margin of 4,932 million that the entity reached last year. The bank they head Jaume guardiola Y Josep Oliú He is in all the pools to star in another of the sector’s mergers after the one agreed by Caixabank and Bankia and the one launched by Unicaja and Liberbank. Like the rest of the entities, it is currently listed below its book value and is, in fact, the second most affected value of the Spanish selective since January with a drop of 72%, exceeded only by the 78% collapse in IAG.
The Spanish selective bank also has Santander with an eye on London, although, in its case, the British business contributed 9.5% of the group’s total gross margin (4,727 million euros out of a record income of 49,494 million ). Recently, the Bank of England surveyed a group of large banks that operate in the country, including the subsidiary of the entity chaired by Ana Botín, but also Lloyds, HSBC The Barclays, to check whether they would be financially and technically prepared in the event that the issuer places the intervention rates (to which it lends money to entities) to zero or negative, something that would happen for the first time in history. This is a measure that other large central banks have already taken with the aim of avoid a liquidity crisis in the face of the biggest recession since World War II.
With regard to Iberdrola, its British subsidiary, ScottishPower, it entered 6,326 million (17.34% of the 36,473.9 million euros that the group invoiced in total last year) through its networks, renewable and generation businesses and customers. The subsidiary of the group that captains Ignacio Galán It is the UK’s first integrated energy company to produce 100% green electricity, that is to say, energy that comes entirely from renewable sources (offshore and onshore wind power).
Another of the heavyweights of the Spanish selective index that is very aware of the talks between London and Brussels is Telefónica, with a strong commitment to the islands. The Spanish operator and Liberty Global announced in May a merger agreement between O2 and Virgin Media (its two subsidiaries in the United Kingdom) to create the largest English operator by assets. Now they plan to invest more than 11,000 million euros in the deployment of new networks, technology and services over the next five years, as they have explained to The Times their top managers.
At the end of 2019, the firm chaired by Jose Maria Alvarez-Pallete it received from British lands 14.7% of the 48,422 million euros of its total turnover (7,109 million euros). These figures give it a greater presence than that of the first Spanish selective company by market capitalization, Inditex. The Galician multinational obtained last year total sales of 26,286 million euros, of which less than 5% would come from the United Kingdom, which contributed 78 million to the pre-tax result of the textile group.