The General Assembly of CECA analyzes the new institutional and financial environment

CECA held its 108th General Assembly today, the first after the implementation of the Single Supervisory Mechanism.

The entities associated with CECA allocated more than 675 million euros to Social Work in 2014.

The top representatives of savings banks and banks created by savings banks met today to celebrate their 108th General Assembly, under the presidency of Isidro Fainé.

Regulatory Agenda: a Sector Prepared for the Challenge of Banking Union

In the context of the Assembly, the current regulatory and institutional environment was analyzed, particularly highlighting the impact of the implementation of the Single Supervisory Mechanism (SSM). The President of CECA emphasized the “positive results” obtained by Spanish entities in the stress tests preceding the SSM. Meanwhile, the General Director, José María Méndez, assessed the Banking Union as “the greatest advance in the process of European construction since the introduction of the euro,” and expressed CECA’s determination to provide its members with all the support they need to facilitate their relationships with their new supervisor, the European Central Bank (ECB).

To this end, CECA relies on the European Association of Savings Banks and Retail Banks (ESBG), of which Isidro Fainé is Vice President, providing an excellent platform for high-level dialogue with European institutions (Commission, Parliament, ECB, and European Banking Authority), the Basel Committee, and the International Monetary Fund.

At the national level, the draft Circular from the Bank of Spain regarding the development of the Law on Savings Banks and Banking Foundations, which is in an advanced stage of processing, has been analyzed. Isidro Fainé noted that this regulation will “complete the reform process of the legal regime of the Sector.”

Financial Agenda: a Strengthened Sector Post-Crisis

The General Assembly assessed the financial situation of the Sector after significant advances recorded in recent months, which have materialized in higher levels of capitalization; significant consolidation and reduction of installed capacity; an improvement in asset quality and increased levels of profitability and efficiency.

1. Solvency: The capitalization efforts made by the Sector entities in recent years reinforce solvency, as demonstrated in the stress tests. In 2014, the Sector entities increased their solvency, moving from a CET1 ratio of 10.5% in December 2013 to a ratio of 12.2% in December 2014.
2. Consolidation and Capacity Reduction: From 45 Savings Banks that comprised the Sector at the end of 2008, it has reduced to 11 groups of entities by December 2014. The average size of the Sector entities has grown from 29 billion to 91 billion during this period. The number of branches has decreased by 36.7% to 14,663 branches, and the employee figure decreased by 33.4% to 82,663 from the end of 2008 to December 2014.
3. Improvement of Asset Quality: From the fiscal year 2008 to December 2014, the Sector entities have made write-downs and provisions amounting to 140 billion euros (14% of GDP). Additionally, since early 2014, there has been a gradual decline in the non-performing ratio, which stood at 12.50% in the Sector in December 2014, compared to 12.61% for the entire system.
4. Profitability and Efficiency: The consolidated result of the savings banks and banks associated with CECA reached 3.732 billion in December 2014, 111.4% more than in 2013. This enhanced result has been attributed to the growth of the interest margin (1.5% year-on-year), a decrease in operating expenses (-14% year-on-year), and a reduction in provisions for asset impairment (-42% year-on-year). Consequently, the Sector’s ROE stood at 6.7% in December 2014, 2.8 percentage points above the levels recorded in 2013, and the efficiency ratio was 50.8%, reflecting an improvement of 6.7 percentage points compared to the previous year.

Social Agenda: The Sector Renews Its Commitment to Social Work by Allocating More Than 675 Million Euros in 2014

The restructuring process has been developed while keeping the values of CECA entities intact, which are structured around the so-called “three Rs” that characterize all entities integrated into the World Savings and Retail Banking Institute (WSBI): Retail, Rooted, and Responsible.

Proof of this is the commitment to Social Work, to which the Sector has allocated over 675 million euros in its own works in 2014. This was evaluated in the IV Commission of Foundations and Social Work, which also met today. On this occasion, the presence of the President of Independent Community Bankers of America (ICBA), Camden Fine, who explained the social experience of community banks in the United States, was featured.

Additionally, the first Map of Foundations created by Savings Banks in Spain, edited by CECA and Funcas, was presented, analyzing the new institutions that emerged from the restructuring.