To talk about CECA is to do so from the Spanish Confederation of Savings Banks, which in the first decade of this century brought together almost fifty savings banks. However, the 2008 crisis –caused by subprime mortgages– triggered a kind of catharsis in the sector, leading to the emergence of the so-called 'savings banks'.
Currently, CECA comprises CaixaBank, Kutxabank, Abanca, Unicaja Banco, Ibercaja, Liberbank, Cecabank and the only two Savings banks that remain standing, Caixa Ontinyent of Valencia and Colonyà Caixa Pollença from the Balearic Islands. The banking foundations of La Caixa, Ibercaja, Kutxa, BBK, Unicaja, Vital, Cajastur, Caja de Extremadura, Caja Cantabria, CajaCanarias, Caja Castilla-La Mancha, Caja de Burgos and Caja Navarra are also present. This is as well as foundations such as CajaGranada, Caja Rioja, Montemadrid, Caja de Canarias, Bancaja, Afundación, Pinnae, Caja Inmaculada, Caja Mediterráneo, Ávila, Cajasol, Caja Murcia, Sa Nostra, Caja Segovia, Fundos, Guillen Cifre and Caja Círculo.
But what better way than to talk to Alberto Aza, CECA spokesperson, who kindly attended this newspaper's call to learn about the present and future of this institution. The conversation is below:
If you had been told a decade ago that only two savings banks (Caixa Ontinyent and Colonyà) were going to be standing today, what would you have thought?
It is true that the scenario has changed a huge amount in the last decade, after a significant consolidation and adjustment process. However, it is worth remembering that the entry into force of the Savings Banks and Banking Foundations Act in 2013 has reconverted the sector inasmuch as it meant separating the old savings banks into two entities: on the one hand, banks to guarantee financial services and, on the other, foundations to manage Obra Social. In other words, the role that banks and the two savings banks have today continues to be assembled around regional roots, social responsibility and retail orientation.
Did you understand that savings banks from the other side of Spain 'colonised' other regions?
I think that the presence of savings banks from a specific area in other territories has not been the norm. In my opinion, savings banks have provided a highly specialised service in their regions of origin, and that has been the success of a great many decades of activity.
How important is the Obra Social of banking foundations?
Enormous. Social work is the raison d'être of foundations. It is a backbone of society and is key to help maintain social cohesion and strengthen the welfare state. In the last five years, CECA's Obra y Acción Social has invested almost 3.8 billion euros, and in 2020 the figure exceeded 770 million, making CECA's Obra Social the leading private social investor in Spain. In my view, beyond the figures, which give an idea of the positive impact of Obra Social –just last year more than 24 million people benefited from some of the activities promoted– it is worth remembering that Obra Social is a tool that provides care and support to the most vulnerable groups. It is an ongoing task, which is often invisible, but in many cases it represents an alternative for social groups that, for various reasons, do not have sufficient structures or tools to continue making progress.
How healthy is CECA at present?
CECA is a highly consolidated association. We comprise 7 banks and two savings banks and from our position of an association we protect the interests of our member entities and promote the mission that they carry out via their financial activity and their Obra Social. We have huge knowledge of the sector, regulation and other key issues for the development the business of our member entities, and from this position we try to bring value to the sector as a whole and society. We are also present internationally through two associations: the European Savings Bank Group (ESBG) and World Savings and Retail Banking Institute (WSBI).
How do you get on with the other banking associations, such as AEB and UNACC?
Our relationship with other associations is good and fluid. In fact, as an example, our level of collaboration with the other Spanish banking associations has led to important achievements in the actions taken by credit institutions to mitigate the effects of COVID-19. We will continue to coordinate our associative actions with them. We are actors on the same stage and, in this regard, I believe that we can all contribute various nuances that collectively benefit the sector and, in turn, society as a whole, because we must remember that the banking sector is essential for a country's social and economic progress.
Negative rates, hyper-regulation, fintech/bigtech competition, non-stop provisioning... what more can happen to the banking sector?
Well, it's true that we are facing new challenges, although I don't think it's something unique to the banking sector. The world has changed a huge amount in recent years. The impact of technology on virtually all sectors has been a huge turning point, accelerating far-reaching changes that we have been able to accept and exploit in the banking sector. Digital banking, for example, has proven to be fundamental during the pandemic and lockdown, and this is something that does not develop overnight. CECA's banks and savings banks have been investing in this transformation for years, which allows us today to reach further and more people. And in terms of regulation, it is undoubtedly a highly important aspect for our business. The banking sector must comply with a whole series of regulations that, ultimately, ensure the security of customers and the economy as a whole. In that regard, it is important that this regulation also applies to new competitors such as bigtech and fintech.
How does banking gain profitability in these times?
Over the years, banking has been able to adapt to different contexts and environments. At this time, with this goal of continuing to generate returns, the adaptation is based on efficiency, in other words, making more use of the strictly necessary resources. This is much more possible and viable today through, as I mentioned earlier, technology. On the other hand, banks –like any other company– offer services and products that require an investment and involve a cost, and customers that use these services and products pay a sum. This is the case in banking and in any other business.
The sector is experiencing continuous branch closures and many redundancies. Where will this deleveraging process stop?
Staff adjustments is closely linked to this paradigm change that I previously pointed out. This trend of adjustments in the branch network, which has also been observed in other European countries, is irreversible due to a change in customer consumption habits. Undoubtedly, the crisis resulting from COVID-19 has accelerated this trend and, in addition, contributes to generating greater efficiencies.
How many banks do you think will remain standing in 10 years?
I would prefer not to make assumptions, a decade is a long time.
Will we see branches of Google Bank, Tencent Bank, Microsoft Bank.... in Spain?
We will have to see what the future holds. What is certain is that, regardless of the presence of new players, if they provide the same services as traditional financial institutions, they should meet the same regulatory requirements.
Will physical money as we know it become extinct?
There is no doubt that the method of payment has changed rapidly in recent years. In addition to the increase in card use, banking has developed other platforms that facilitate payments without having to have cash or a card to hand. The most notable of these is Bizum, the instant phone-to-phone payment service that Spanish banking promoted in 2016, and although it grew significantly in the following years, it has experienced a major boost during the pandemic, and today it has more than 16 million users. These figures give an idea of how our payment habits have been transformed. Therefore, we are heading towards a world where cash may continue to exist, but probably not in the way we have known it thus far.
What do you think about cryptocurrencies?
As with any other asset with which investments are made, I believe that it must be monitored and regulated by the competent authorities to ensure the correct functioning of the financial market.
Will all banks end up charging retailers for deposits?
Banks –like any other business– offer services and products in exchange for payment. In the same way as accessing an online video platform, you need to pay a monthly fee, access to financial services and their products entails a cost. Typically, the relationship that customers have with their bank is a differentiating factor in managing fees. The more you are linked, the lower the fees, in many cases there is a full discount.
To finish off, being a banker right now, is it a high-risk profession?
It certainly shouldn't be. Banking, bankers who attend us at our branch or in online banking, offer a service without which the economy could not function. Banking is the main source of financing for families and companies in Spain. Consumer financing is essential to provide access to goods and services of all types, ranging from a car, a school year or new household appliances. Without it, it would not be possible to obtain the money necessary to make these payments, with the resulting negative effect for both families and businesses. And for companies, banking is a key pillar, as it is the main source of funding for SMEs, which in the case of Spain represents 99.8% of the production fabric. Without banks, families and companies that would like to access financing would be forced to go to other figures that do not offer the same guarantees, exposing themselves to liquidity risks, uncertainty in their data management and usury.