Sunday, May 22

The bank faces new reputational problems with the wave of ERE and criticism of salaries from the top

“In this crisis we have not been the problem, we have been an important part of the solution.” This phrase has become a mantra in the banking sector in recent months. With differences in the construction of this statement, practically all the bankers who have had the opportunity to assess the situation of the economy and the sector have highlighted that, despite the economic crisis caused by the pandemic, banking has not become a problem. upside down. Economic policy decisions such as ERTEs or loans guaranteed by the ICO have been fundamental pieces for this. However, even having avoided the problems of the past, in the sector a new problem of reputation is assumed, affected among other points by the ERE, the criticism of the remuneration of the executives or the investigation of the CNMC to some entities.

Guindos defends the wave of layoffs and bank office closings to avoid “a solvency crisis”

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The reputational problems that affect the image of the sector are not new and have been practically constant since the last financial crisis. First, due to the collapse of the savings banks and the need for a millionaire rescue with public money. Then came the continuous court rulings that called into question the practices in the commercialization of mortgages. Floor clauses, multi-currency mortgages, mortgage expenses or, more recently, the IRPH have led rulings that amended the plan to the actions of the banks. When these problems seemed in the past, the wave of layoffs in the sector and the contrary messages from the Government, not only from the United We Can area, have once again awakened the sector’s concern for its image.

So much so that some of the main entities in the sector have contacted to seek solutions, even if they are communicative, on a problem that has worsened in recent months, as reported The country Recently. During this week, different figures in the sector have recognized that these conversations exist and that the situation worries. “We want to convey to society the commitment we have,” said Carlos Torres, president of BBVA. “We have not always explained well the role of the sector in the economy,” added the manager, when questioned about these problems.

He made these statements at the UIMP summer course that has been held in recent days, a forum in which César González Bueno, CEO of Banco Sabadell, was also present. The manager, who has recently acceded to the position, acknowledged that “it is evident” that the banking sector has to make an “effort” to improve to continue fulfilling its function. González Bueno pointed out that this activity has a “very pronounced focus” and that “there is a communication problem” about its activity.

The president of the AEB banking association, José María Roldán, also showed in the same forum the need for banking to improve its image, although, once again, he claimed his role during the crisis caused by the coronavirus. “We have granted 100,000 million in financing, it is the same as the bank rescue line in 2008,” he defended. However, he pointed out that “a reflection” should be made on certain aspects, including the remuneration of managers, assuming the possibility of incorporating criteria such as sustainability in the variable part of bankers’ salaries.

Roldán, who next year will cease to be the visible face of the bank when it comes to sectoral issues, denied that an agreement has been established between the banks to improve their image, but did acknowledge that there are “sectoral initiatives.” “It is positive that we do it,” he said about how to improve the image of the bank. “I have been in office for seven years and this is a permanent issue, excellence has been the requirement for this sector for years.”

Supervisors have also used this appointment to remind banks of their reputational problems and encourage them to seek a solution. “The reputational issue is very important,” assured Pablo Hernández de Cos, governor of the Bank of Spain. The head of the Spanish banking supervisor urged banks to work in two ways. The first, that of conduct, through transparency and good practices in the sector. The second, through communication. Although he warned that without the first, the second does not have the capacity by itself to improve the image of the bank. Hernández de Cos analyzed that “many of the problems” of the banking reputation are still inherited from having been “in the eye of the hurricane” during the past crisis.

Lack of self-criticism

In the absence of specifying what measures may arise from the conversations that the banks are having, no concrete solutions are publicly exposed that could serve to improve the image of the sector. In fact, some of the measures taken by the banks that are causing the loss of prestige in recent months, continue to be widely defended and supported, both by banks and by supervisors without any signs of self-criticism. In fact, some controversial assertions have been heard, such as that “there are more people without primary care than without a bank,” as Roldán pointed out, or that, without the EREs and office closures, “a solvency crisis” could not be avoided. as stated by Luis de Guindos, former Minister of Economy and current Vice President of the ECB. The Bank of Spain has also supported these movements, ensuring that they respond to a profitability problem for Spanish banks and that “a banking sector that is not profitable will cause us a financial stability problem.”

The dismissals have provoked for the first time a more or less unanimous criticism from the Government. Nadia Calviño herself, Minister of Economic Affairs, snapped at the bankers that “it is not positive to raise the future of a sector only by reducing the number of employees.” Banco Sabadell, Santander, Ibercaja, BBVA and CaixaBank have proposed or are executing ERE during this year. It is estimated at some 15,000 layoffs, one of the highest figures since the financial crisis, confirming Spain as the country that has made the most layoffs in Europe since the collapse of 2008.

Both BBVA and CaixaBank have been protagonists in recent months in the drop that has filled the glass of the unions and the workforce with their respective ERE. In the entity chaired by Carlos Torres it was the first time that a collective dismissal was negotiated and in the group participated by the State, figures never before seen have been raised, with a starting point that supposed 8,200 exits. The historic social peace of the sector, which, despite the great EREs of the past, had never had episodes of conflict, has been cracked this year. General strikes have taken place in both entities and, in fact, CaixaBank will expose itself to the second in a week on Tuesday if an agreement is not reached with the unions. The president of the entity himself, José Ignacio Goirigolzarri, was one of the speakers at the aforementioned summer course, but the conflict at his bank caused him to end up canceling his presence.

Nor has he expressed self-criticism regarding the salaries of managers, who were also disapproved by the Executive at the time that large EREs are being carried out. Usually in the sector it is argued that salaries are already highly controlled by the supervisory bodies and that there is high regulation of them. Specifically, it is the ECB that sets the remuneration rules and its vice president, Luis de Guindos, limited himself this week to claiming that “moderation was requested” during the past year due to the pandemic and “it was complied with quite well.”

The last of the issues that has hit banks in recent days has been the file opened by the CNMC to investigate possible infractions of the rule of ICO loans endorsed by the State, having found cases where related products were sold or were used to refinance debts, both issues prohibited by the law. Specifically, the file affects Sabadell, Santander, Bankia and CaixaBank. This investigation has not sat well in the sector by arguing that, if it had occurred, there would be few cases.

The most critical has been Roldán, head of the AEB. He came to charge against the agency and its methods, by making public the initiation of the file before carrying out the investigation. “As a regulator that I have been – he was general director of the Bank of Spain – I feel uncomfortable,” he said. “The reputational damage that occurs and the newscast conviction is irrecoverable, you do damage to the administrator that you will not be able to compensate whatever happens, I have always been in favor of maintaining discretion,” he emphasized.

The president of the CNMC, Cani Fernández, responded to him in the same forum, assuring that she did not agree with keeping the procedures private, since it is “an obligation of transparency.” “Whether they are few or many, the question is that they exist and if it is proven, the economic effects continue to affect the consumer,” he concluded.