States want to protect strategic companies. And they are going to need financial partners. In Spain, La Caixa is the only group that continues to invest in business investments. The replacement in Criteria is a powerful signal.
An established maxim of finance is that large strategic investments give power and with it also come more benefits, monetary and political, of influence, which strengthen the survival of the model. This principle is even more evident in times, such as the current one, in which the policy of open doors to the entry of capital from any source is being increasingly questioned.
Brussels is preparing to strengthen the protection of companies classified as strategic against landings in their capital of investors considered dangerous. It is a response to their own helplessness and the realization that European companies find it increasingly difficult to compete against the giants of the US and China. Also to the transformation of the world economy, especially due to the Chinese emergency, and its consequent fragmentation, fading the unified globalization of recent decades and turning upside down the world order organized by Washington after the Second World War.
The shielding measures advocated by the European Commission involve giving more capacity to Member States to regulate this protection. This is a very wide margin of action. What are the strategic companies? Firstly, those of defense or military; but also telecommunications; or those of infrastructure and transportation, from communication routes to airlines; and many of the services considered basic or essential, such as energy, water, or communication, among others. Possibly, also the big banks.
In several European countries, measures have been adopted to restrict these investments, especially Germany. Italy has withdrawn from the so-called Silk Road. Spain has been one of the EU countries that most happily privatized its large public companies, first and left them in the hands of international investors, later. That is the conclusion when compared to what is happening in Germany, France or Italy, to mention the three large economies of the single market, where the States had not completely abandoned the capital of essential companies or had relevant national partners to ensure the control.
Perhaps for this reason, it is now in Spain where there are two of the most notable cases in Europe, due to their relevance, of the appearance of investors with interests that diverge from those of the Government of Pedro Sánchez: Telefónica and Naturgy. Without a doubt, a first round of what can happen if current trends are maintained.
In both companies, La Caixa – its investment holding company, Criteria – maintains relevant stakes in the capital, in addition to controlling the country’s leading bank, Caixabank. A manifestation that the uniqueness of the galaxy presided over by Isidro Fainé – the combination of the classic banking business and investment in service companies, with recurring income and results – has survived the financial crisis, the regulatory demands of the banking authorities that penalize those business holdings and the shock of the coronavirus.
A certainly diminished survival because some crown jewels were lost along the way, such as Abertis or Agbar. Also, although less strategic, with respect to the oil company Repsol, chaired by Antoni Brufau and in which he was present to protect the gas company Naturgy, of which the oil company had been a relevant shareholder. In any case, the chronicles that, interpreting these departures, sentenced the end of his singularity turned out to be “exaggerated,” as Mark Twain wrote regarding the news about his death.
At these times, when the Government, this one and probably one from the PP, must look for allies to protect strategic companies, La Caixa can be a reference. And this is because there are no more operators in the financial sector who maintain stakes in companies. Regulations penalize it, as do exchanges that do not understand this mix of activities. In the past, when the governments of socialist Felipe González undertook the first privatizations, other financial powers, Santander and BBV, accompanied La Caixa in the creation of the so-called hard cores. Now they are no longer available and their dependence on international markets makes it impossible to return to those practices. This is the first of the two great singularities of the La Caixa model.
The second is territorial, since this galaxy, which includes the first bank and the first investment holding company, is not centralized in the Madrid square, unlike what happens with all the rest of the financial activity, with the exception of Sabadell. . Its operational reference continues to be largely in Barcelona.
The convergence of interests between the Government, which does not want large companies in foreign hands, and La Caixa, which has made clear its intention to defend its strategic holdings, coincides with the song that is being played in other European capitals. Also in Washington. New climate for business, from regulation to competition rules. The newly appointed Minister of Industry, Jordi Hereu, told Cinco Días about the merger between Iberia and Air Europa: “We need major players.”
In this context, the change in Criteria’s management has been carried out, the appointment of Ángel Simon as CEO. Its arrival suggests a new investment policy, left behind is diversification into small holdings, which did not reinforce its role and whose performance does not depend on the management leverage, power and influence of La Caixa, but rather on financial calculations on whose compliance the entity It had nothing to say. And from there its new firepower will be fueled, a portfolio that is not considered strategic and that amounts, to begin with, more than 3,000 million euros.
