Short-term double or quits on M&A and taxation
While in Europe markets are shrinking due to the Brexit, in the Middle East a new super-bank is being created which will start to operate in early 2017.
Brexit, the European banking crisis (with Italy and Portugal just about to be rescued), the emerging economies’ lower growth and international markets’ instability are affecting the financial sector, and the M&A could not be less important.
In Spain, this sector felt 35% during the first semester of 2016, especially in the real estate field which suffered a 67.5% meltdown. Everything is not bad though and we witnessed in the same period a great upturn in the financial sector, that increased its operations more than 12%, according to specialised media Bolsamanía’s information.
Meanwhile, in the Middle East, a deal was closed in the United Arab Emirates (UAE) by which the country’s second and third main banks were going to merge in order to form a super-bank assessed in E175.000 millions. The Abu Dabi’s National Bank and First Gulf Bank’s joint will become the greatest Middle East and Northern Africa’s bank in a soon-to-be-completed -early 2017- operation.
In any case, while the Middle East they are looking to the future, Europe is still in a ‘reactive mood’. Thus, the European Union reacted now to the ‘Panama Papers’ scandal announcing a campaign against tax loopholes in order to avoid fraud, as stated by the British newspaper The Guardian. In this regard, fiscal authorities will be empowered to identify off-shore funds’ owners and, besides, a new law will be drafted to hamper lawyers and fiscal advisors to help their clients ‘to stash money’ in tax havens. This new measure would force businesses to disclose not only their revenues but also their tax bills.
In addition, Brexit disrupted the main European stock exchanges. It was not an easy summer, like it was pointed out Spanish economic newspaper, Cinco Días. Uncertainty faced by most-exposed to the British market businesses affected their stock prices and income statements.
To put in other words: and income and trading activity drop was expected although its real effect could not be known in detail until, in the following weeks, businesses released their company results and their profits per shares were analysed. However, from Brexit, and from a more public point of view, we a witnessed Spanish banks such as Santander or Sabadell crashed, with a loss of 17% and 20% respectively.
If you have any legal doubt on how to proceed when facing a company merging or acquisition, or how to optimise your assets from a tax point of view, please do not hesitate to contact us for a complimentary review at email@example.com
Del Canto Chambers’ Editorial Board