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José Ignacio Goirigolzarri, President of Bankia, during his speech at the ‘AEFA Meetings’ event, arranged by the Family Business Association of Aragón (AEFA) and the Chamber of Commerce, Industry and Services of Zaragoza.

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In a conference in Zaragoza on ‘The outlooks of the banking industry’

Goirigolzarri assures that European banks must think about their business model in the current interest rate context and digital transformation

The president of Bankia has affirmed, among other statements about the situation of the banking sector, that “Banking must obey excellent professional and ethical criteria” and that the entity has “excellent corporate governance”.

Communication Bankia

By  Communication Bankia

Publish on 
12 September 2019 - 20:15

  • The chairman of Bankia has taken part in the annual event ‘AEFA Meetings’, arranged by the Family Business Association of Aragón and the Chamber of Commerce, Industry and Services of Zaragoza
  • He has highlighted that Bankia has “two very important strengths” for the future: it is “the most solvent bank” among the major Spanish banks and it is “highly efficient”
  • He also said that “we must be very cautious when it comes to economic policies” because the Spanish economy has “positive inertia”, but “there are risks in the mid-term”

The chairman of Bankia, José Ignacio Goirigolzarri, has assured that the European financial industry must think about its business model because of the three major challenges it has to face: low profitability caused by negative interest rates, the changes in customer habits caused by new technologies and the reputation of the industry.

Goirigolzarri took part in Zaragoza in the ‘AEFA Meetings’ event, arranged by the Family Business Association of Aragón (AEFA) and the Chamber of Commerce, Industry and Services of Zaragoza, and gave a speech about ‘The outlooks of the banking industry and its evolution’.

The event, ‘Globalization and family business’, has been attended by around 200 business owners from, among them, the chairman of AEFA, Alfonso Sesé; and the chairman of the Chamber of Commerce of Zaragoza, Manuel Teruel, along with Bankia’s Company Business Corporate Director in Catalonia-Balearic Islands, José Manuel García Trany.

Within this new context, the chairman of Bankia has argued that the profitability of European banking is below the cost of equity due to the marked increase in capital demands and negative interest rates, which has lead them to be listed at 50% of their book value, while American banks, unaffected by these factors, have a capitalisation 17% higher than book value.

A country needs a solid and profitable financial system, given that if profitability is below the cost of capital, the system will be infra-capitalised and, consequently, will not be able to finance its economy, therefore slowing down its development.

José Ignacio Goirigolzarri
Chairman of Bankia

This scenario, he said, is not only a problem for the financial system, but for the economy as a whole, because “a country needs a solid and profitable financial system, because if profitability is below the capital cost required by investors, banks will not be able to participate in the market. The system will be infra-capitalised and, therefore, it will not be possible for a country to increase its credit portfolios which would prevent it from financing its economy, therefore slowing down its development”.

“Evidently, banking managers must react to this situation within their range of action and one of the tools for this purpose is technology”, the chairman of Bankia said, “technology allows us to improve our efficiency and, at the same time, provide excellent service to our customers”.

In this regard, he mentioned that the new players in the financial industry “are good for customers, who get high-quality service with excellent conditions, and also for competitors, as this forces them to improve and reinforce their customer service”. However, he argued that “this competition must have the same rules for all, not only for equality reasons, but also because this type of situations would generate regulatory arbitrage which, as we have seen in the past, is a source of destabilisation for the system”.

“Banking must obey excellent professional and ethical criteria”

The last challenge of the financial industry mentioned by Goirigolzarri has been reputation. According to him, “a project, an industry or a company are only sustainable over time if society wants it to exist and understands its usefulness”. “And because of that, I think it is very important for us to explain that a healthy and profitable financial system is key for the welfare of the citizens of a country”.

But, for this purpose, “there is no doubt that the banking industry must obey excellent professional and ethical criteria, because otherwise it would be a constant source of suspicion which would generate a significant weakness”, he underlined, “this must be a goal for each and every entity in order to improve the reputation of the industry”.

After introducing the major challenges facing the European and Spanish banking industry, Goirigolzarri has argued that “the Spanish banking industry is solvent and properly capitalized, as proven by the latest stress tests performed by the ECB”. And all of it has been thanks to a “great transformation” of the industry within the last decade motivated by “an enormous consolidation process” and a lot of effort put into strengthening balances.

Bankia, “excellent corporate governance”

Regarding Bankia, Goirigolzarri has admitted that his “chief concern” when he joined the entity was reputation and that was one of the reasons to “completely” change the Board of Directors to achieve “excellent corporate governance”.

“In 2012 we received a significant capital extension”, he recalled, and admitted that “those were difficult years” but at the end of 2017, the entity met all the goals of the Restructuring Plan, which allowed Bankia to become “a bank that competes under the same conditions as the rest” and thanks to this it was able to merge with BMN in 2018.

In this regard, he said that the lack of restrictions has allowed Bankia to “strongly increase” its business rate, which he said is a “priority”. “This increase in the business rate has been very noticeable in Aragón, and I want to extend my appreciation to its business fabric for its trust”, he said to Aragón business owners.

The chief executive officer of the entity emphasised that Bankia has “the same strategic goals the industry has”, along with privatisation, but he has mentioned its “two very important strengths”: a model that has generated a large amount of capital, which makes Bankia “the most solvent bank among the major Spanish banks” and the fact that it is “very efficient”.

“Bankia is not only a very appealing professional project, but it is also a project with a significant social impact”, he ensured. “Being as realistic as possible, I can assure that there will be no lack of commitment, effort, excitement and will”, he emphasized.

Major challenges of the Spanish economy

On a macroeconomic level, the chairman of Bankia has argued that “we must be very cautious when it comes to economic policies”, because even if the Spanish economy has “some positive elements” and its growth rate is clearly above the European mean, there are “risks in the mid-term that we have to prioritise and manage”. According to him, “the major structural challenges” of our economy are unemployment and public debt.

All things considered, Goirigolzarri has highlighted that “over the last six years, the Spanish economy has experienced significant growth” and that “Spain has entered a new phase of the expansion cycle”. “We must be aware that the risks, coming from abroad, have a clear impact on our country, as it has experienced a major transformation”.

On the international context, he said that “the world has seen very reasonable economic growth, synchronised in different regions” but “the global economy depends more on the United States now” while the European economy is experiencing deceleration.

Goirigolzarri has acknowledged that “economic growth as descending risks” and “this summer we have seen that some of those risks have become a reality”, he said, and cautioned that “once again, since the 70s, the world is solving its crisis with the same recipe: higher debt and lower interest rates”.

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