BBVA - Press Room

• “The financial and economic crisis has emerged from a widespread reluctance to embrace the principles of transparency, integrity and prudence, from poor regulation and oversight and from a ‘superabundance’ of liquidity”
• “Faced with this crisis, BBVA has managed to consolidate its standing as a benchmark player and one of the world’s healthiest banks”
• “The principles underpinning the BBVA business model are ethics, transparency and prudence, enabling us to stay one step ahead of the rest”

“A customer-oriented approach, risk management and cost control are the key factors behind our winning business model, which marks BBVA apart from its competitors. And this is the main reason why BBVA is currently able to enjoy telling competitive edges over its competitors”, confirmed Juan Asúa, BBVA’s Director for Spain and Portugal, during his address at the 2009 Financial Conference staged by the Nueva Economía Fórum and The Wall Street Journal Europe. During his speech entitled “BBVA’s response to the new environment”, Juan Asúa stated that “throughout the current crisis, BBVA has managed to consolidate its standing as a benchmark player and one of the world’s healthiest banks, seeing as though very few banks have been able to match our impressive financial credentials and the strength of our policies, which have allowed us to continue generating positive results against such a gloomy backdrop”.

Juan Asúa, BBVA’s Director for Spain and Portugal, got his address underway at the Nueva Economía Fórum staged by The Wall Street Journal Europe with a recap of the current crisis, which, in his opinion, stemmed from the financial system itself due to its reluctance to embrace the principles of transparency, integrity and prudence, coupled with poor regulation and oversight and the ‘superabundance’ of liquidity. All of these contributing factors have had an enormous impact on the real economy.

“We are being swept along in the wake of a lengthy and unforgiving crisis, which will lead to sweeping changes being made to the financial sector as we know it now. This transformation is going to involve a drastic shake-up of the global banking blueprint, new and much stricter regulation and oversight and across-the-board changes to many business models”, confirmed Juan Asúa.

BBVA’s Director for Spain and Portugal pointed out that the current financial crisis will pass through three stages: “The first, which boiled over in 2008, is coined the ‘financial stage’ and is characterised by liquidity problems and losses due to plummeting prices of financial securities. This stage is now in its death throws, having already caused the demise of numerous major players in our sector”.

“The second stage of the crisis, which is already underway, entails a recession of the real economy, leading to a spike in delinquency and a reduction in business activity. The losses during this stage, further compounding those caused by the first stage, will result in even more business casualties. In this particular stage, proven capital and solvency are key to survival”.

According to Juan Asúa, slumping economic activity during this stage will increase delinquency rates. Moreover, prevailing fears as to just how long the recession is likely to continue mean that 2009 will prove even more difficult than 2008 for the banking sector. That said, he went on to add that certain aspects inherent in the Spanish banking system, such as its business model, range of products and services, risk consolidation and regulatory control, have all helped Spanish banks put on a better relative showing during this stage.

“During the third and final stage, surviving companies will have to face the industrial make-over of the sector head-on. This is an absolute must if we are to adapt to the major technological and social changes we’ve witnessed over the last few decades”, added BBVA’s Director for Spain and Portugal.

The response of BBVA

“Against the current backdrop”, claimed the head of Spain and Portugal, “our group is a prime example of how institutions can learn to anticipate future trends and stay one step ahead of the game, illustrated by our current status as one the world’s healthiest and most solvent financial institutions. In 2008, our bank was one of the few that managed to close the year in positive figures while increasing net profit by 0.2%”.

This means that while the global economy and financial markets are falling apart around us, BBVA is still able to generate recurring profits. “Our positive results are in stark contrast to those of our competitors”, he added.

“BBVA has managed to consolidate its standing as a benchmark player and one of the world’s healthiest banks. Few banks have been able to match our financial credentials or the strength of our strategy, which has enabled us to keep generating positive results against such a gloomy backdrop. Despite our smaller overall size in terms of assets, BBVA leads the way when it comes to generating returns, spurred on by our retail trade-oriented approach and reduced dependency on leveraging. Perhaps the most telling figure is that despite our more streamlined size, BBVA was the world’s second most profitable bank during 2008”.

“In light of all this, BBVA has remained at the forefront of the global financial sector in terms of its efficiency, returns and credit rating. As we’re now in the midst of the second stage of the crisis as described above, where the real economic impact takes the form of increased delinquency and decaying business activity, having a sturdy capital base is key”, he went on.

“And to attain this, we need a business model capable of generating cash-flow and profits year after year, with no unforeseen drawbacks, while being able to withstand adverse events and crises. A winning management model that turns in consistent results during the entire economic cycle”.

In this regard, Juan Asúa confirmed that “a customer-oriented approach, understood as recurring revenue; risk management, which essentially boils down to prudence and foresight in the decision-making process; and cost control, which in BBVA’s case takes the form of its Transformation Plan, are the cornerstones on which our winning management model are based. And this is the main reason why BBVA is currently able to enjoy telling competitive edges over its competitors”.

“All these factors”, continued BBVA’s Director for Spain and Portugal, “bearing in mind the principles on which BBVA bases its business model, namely ethics, transparency and prudence, have pushed us right to the forefront when it comes to customer relations and corporate social responsibility”.

BBVA’s most senior officer for Spain and Portugal concluded by underscoring BBVA’s foresight in offering a range of anti-crisis products, marking the first time a bank has simultaneously included mortgage, payroll and savings incentives and a special credit line for freelance workers in one sole campaign, all intended to help us overcome the crisis while ensuring the bank’s credit rating is kept in check.

Juan Asúa wrapped up his address by stressing the importance of financial institutions tailoring their products to the needs and demands of their customers. “At BBVA, we like to think of ourselves as a ‘Bank of People for People’ and we’re fully aware of the responsibility we have with our customers and society alike.”