Spanish banking shares dropped Wednesday as Abengoa SA, a national renewable-energy company, began creditor-protection proceedings which may leave the nation’s lenders with losses.
Banco Popular Espanol SA fell 4.8 percent at 11:02 a.m. in Madrid, while CaixaBank SA declined 3.6 percent and Banco Santander SA, Spain’s largest bank, dropped 3.3 percent after falling as much as 4.6 percent. They are among the worst performers in the benchmark Stoxx Europe 600 Banks Index, which was up 0.1 percent.
“Bank stocks get especially hit with the news because of the exposure to Abengoa debt, which right now seems to be on the brink of the biggest default we’ve seen in the past few years,” said Francisco Salvador, a strategist at FGA/MG Valores. “It raises concerns that there are still highly leveraged Spanish companies.”
Abengoa said Wednesday Gonvarri Corporacion Financiera ended an accord to invest up to 350 million euros ($371 million) in Abengoa because it failed to meet the conditions set, according to a regulatory filing. The company said it will start creditor protection proceedings.