Alberto Aza: “The tax for decree impedes that the banking can negotiate”it

Alberto Aza, CECA's spokesperson, discusses in ON ECONOMÍA issues related to the Government's plan to make the temporary levy on the banking sector permanent.

Interest rates have fallen three times since June, is it time to end the bank tax?
Our position has not changed, from the outset we have been staunchly opposed to the tax because it has a negative impact on credit and the economy. Moreover, it is incongruous because it taxes income rather than profits, and therefore does not take profitability into account. Our opinion has not changed. An appeal has been filed and we are looking at a two to three year scenario until the courts make their decision.

However, the government wants to make it permanent. If this is the case, what are you asking for, a negotiation?
The inclusion of the tax into our legal system would be by means of a decree law or, alternatively, by means of an amendment to the articles of a bill currently before Parliament. These options undermine the quality of public debate and make it impossible for the banking sector to state its position on rules that affect its activity.

Can the banking sector stop the tax?
CECA will continue to defend the interests of our member entities and to express our vigorous rejection of the tax. Taxing banking activity on a permanent basis has a negative impact on the economy and on employment, with an estimated €50 billion erosion of the banking sector's financing capacity. Moreover, we would be the only European jurisdiction with such a tax, placing Spanish banks at a clear competitive disadvantage. Not to mention that the conditions that the government used to justify the tax no longer prevail today: at that time rates were rising rapidly, today we are on a path of rate cuts.

Have banks given less credit as a result of paying the tax?
The tax has clearly had an impact on the profitability of companies and on lending capacity. Yes, it has had an impact, but in the current context, we have seen a reactivation of credit because of the rate cuts.

In addition to the tax, there is a lot of focus on the BBVA-Sabadell takeover bid. Is there still room for consolidation?
The level of bank consolidation in Spain is slightly above the European average. Actually, the unresolved issue is cross-border transactions, which face regulatory difficulties due to the divergence existing between the different countries. And, therefore, the important issue here is that we advance with regard to the banking union, because that would be the way to create large European banks capable of competing internationally.

So, is there no room for more mergers in Spain?
I believe that the concentration of the banking sector in recent years has been intense and good for banks and customers. Banks today are stronger, more profitable, more solvent and more resilient. Furthermore, competition, far from being reduced, has increased. It is not necessarily the case that the more concentrated an industry is, the less competition there is. And I believe that the Spanish banking sector is a clear example.

But the Bank of Spain is studying, together with the Spanish National Markets and Competition Commission, why deposits have not been remunerated...
With regard to deposits, there has been a peculiarity in the Spanish banking sector this year and last, and that is the excess liquidity, which is close to an all-time high. This means that there is less need to resort to deposits. In any case, the data we have is that 1 and 2-year deposits for households and companies offer a remuneration that is above the European average.

And with interest rates falling, are record results a thing of the past?
The outlook for 2024 is that results will exceed those of 2023, but it is also true that profit growth is moderating; interest rates and narrowing margins are playing a role. We expect it to peak in 2025.

We are seeing a significant reactivation of mortgages, but also of consumer credit, should banks be concerned?
Household debt levels are adequate and manageable, especially after the early repayment of many loans, especially mortgages over the last two years. We are in good shape and we are not worried about the demand for credit because it has been weighed down in recent years by an environment of rising interest rates.

In recent years, the banking sector has improved profitability and efficiency, partly due to branch closures and staff adjustments. Will we see more?
For now, we do not expect to see any further adjustments. The efforts undertaken by banks in recent years to optimise their capacity have been transformed into efficiency gains that are essential to defend profitability. Therefore, this optimisation is proving to have been beneficial for banks.

Some believe that the banking sector went too far. In fact, the Government had to force the banks to seek solutions with the elderly and in rural areas. Has there been any progress in this area?
In February 2022 we launched a ten-step plan to improve the service provided to the elderly, who need to be treated with greater care, and the results are very positive. In satisfaction surveys, 92% feel confident and autonomous in their dealings. As for rural areas, the initial target set was extremely ambitious. To achieve 100% face-to-face access to financial services in all Spanish municipalities is to speak of full financial inclusion and I doubt that any country could achieve this. However, the progress made has been very significant. The population residing today in a municipality that has face-to-face access to financial services is 99.1%.

Simultaneously, progress is being made on solutions such as the digital euro. How long before it arrives?
The digital euro made progress in the previous European legislature, in its preparatory phase. But it stalled in the legislative phase and we have to wait to see the appetite of the new Commission and Parliament to see if they will drive this project forward. We believe that it can have an impact on the banking sector and therefore it is important to limit digital euro holdings to low amounts, to ensure that its role is transactional rather than for investment or savings purposes.

Digitalisation is advancing, but there are those who do not have enough information about certain products. What is our financial education like?
All the surveys conducted in Spain show that financial literacy in Spain is deficient, we fail. The last Eurobarometer placed Spain in fourth last in the ranking. This is why this is a priority for the banking sector.

And what measures is CECA taking?
We at CECA have been committed to this for a long time. Since 2018, in this six-year period, we have invested €18 million in financial education programmes and this places us as the country's largest investor. However, much needs to be done because we are facing a structural challenge in our country, and it requires far-reaching measures. One pending task is the inclusion of financial education in the school curriculum from an early age and throughout the entire educational cycle. This will produce adults with adequate financial knowledge.