Alberto Aza: “The better the banking sector performs, the better it will benefit its Social Work”

Alberto Aza is the spokesperson for CECA. He attended a discussion on financial education of the Edufinet project organized by CECA and Unicaja Baloncesto yesterday in Málaga. The event featured swimmer Ona Carbonell, ambassador of the Social Work.

In numbers, what is the scope of the social work of the former savings banks?

First, I would like to explain what the Social Work is. These are the charitable activities carried out by banking foundations, resulting from the separation of savings banks into banks and foundations, which retain often significant participation in these new banking entities. This means that a large portion of the dividends from these banks revert to society, as they go directly to the foundations and their Social Work. In the last five years, the foundations have allocated 3.8 billion euros to the Social Work; in 2020, a year of great complexity due to mobility restrictions, 770 million euros were allocated, and 50,000 activities were carried out, benefiting 24 million people. The social action fund – allocated to the most vulnerable groups – constitutes the largest portion. The Social Work of the entities associated with CECA is also the largest private social investor in our country.

Has the reputation of banking improved after the pandemic?

The public opinion has rated the actions of the banking sector very positively. The entities have implemented emergency measures of great magnitude, such as the channeling of ICO credits, granting mortgage moratoriums, and advance unemployment or retirement benefits… According to a survey by the consulting firm GAD3, the valuation of the measures implemented by the banking sector stands at 8 out of 10, which is a very high score. In less than a year, the emergency financing mobilized by the banks has exceeded by 30% all the European funds that will arrive in the next six years.

It has been said that in 2008 banking was the problem and now it has been the solution. But to what extent has banking suffered from the sudden halt of activity?

The solidity of the banking sector has allowed it to be in a position to lend from day one, due to its internal capital solidity, governance, and transparency. The impact of the crisis has been mitigated by these circumstances. However, there were exceptional provisions in 2020, to anticipate the impact of the crisis on results. For now, however, there are no signs of increased delinquency; in fact, we are doing better now than at the start of the pandemic. But surely there will be.

How far will the reduction of offices go?

Banking is undergoing a process of adaptation, like many sectors, due to the advancement of the digitization of our societies and a scenario of negative rates, which affects the profitability of entities and has been maintained since 2014. One of the major changes is the consumption habits of customers. Face-to-face attention is becoming less relevant, and the vast majority prefer to be served through digital channels, especially for transactional operations, which is what branches have traditionally done. Therefore, offices are being reoriented to become centers for providing higher value services.

Will mergers continue?

This is not new. Supervisors have insisted on them occurring. The level of banking concentration in Spain is intermediate, so there could be more operations in that regard. However, mergers respond to a criterion of efficiency (more income with fewer costs) and the Spanish banking sector is more efficient than the European average. Thus, it does not seem there should be many mergers in that regard.

Therefore, the current scenario is squared.

Apparently yes, but the decisions correspond to each entity.

What is your opinion on the new competition from fintechs and technology companies like Amazon?

The emergence of new competitors is not only good but necessary, as they bring innovation to the sector. However, if we want to compete on the same playing field, we must be subject to the same rules. We must think about the consumer. Much of this regulation is made to protect the client. What happens to the client who contracts services with these fintechs but is not legally protected? Who can they turn to legally?

We have two employer associations in banking. Explain the reason for CECA’s existence.

We share interests with the AEB (Spanish Banking Association) and collaborate closely. But there are differential elements, such as the Social Work, which has a 300-year history. We are also differentiated by the concept of territorial roots and the idea of retail banking. The DNA of CECA entities remains the same as when they were all savings banks, and this has been evident during the pandemic.