The CEO of Bankia, José Sevilla said that the merger with CaixaBank will make it possible to address this 'difficult' situation with a 'more powerful' bank as part of Spain's leading financial group.
During his participation in the '27th Financial Sector Meeting', whose motto was 'Building the future', Sevilla explained that 'it is reasonable to believe that interest rates will stay negative for a long time, which will change the banks' profitability equation'.
'Add to this the uncertainty caused by the pandemic in terms of impact on the income statement, higher provisions, more difficulties for customers to pay off loans, and the idea of joining forces makes sense', stressed the CEO of Bankia.
He reminded his audience that the merger of Bankia and CaixaBank has 'created Spain's largest bank, the main Spanish financial group by size of balance sheet, size of business, as well as a more diversified bank'.
With the merger of Bankia and CaixaBank, we created the main Spanish financial group by balance sheet size and business.
Sevilla added that 'for Bankia shareholders it is a great opportunity to enter a group that has more capacity to create value'.
In the European market, according to the CEO of Bankia, 'consolidating banks to reduce costs and become more efficient in this context is becoming increasingly popular'.
That is why he wanted to make it clear that these consolidation processes do not affect competition in the sector. 'Competition in our sector is on the rise, not only because we compete among banks, but because there is a group of entities beyond the banking sector that is competing by offering credit and different payment methods'.
Support of viable companies
Sevilla also mentioned measures put in place to mitigate the impact of the coronavirus crisis in Spain, such as loan default and ICO guarantees, saying that 'the banks have given decided support to this measure to help companies and families in terms of liquidity'.
'ICO lines, moratoriums and guarantees has worked in Spain better than any other country in terms of guarantees and ERTE arrangements', he said.
Granting liquidity measures is necessary for the CEO of Bankia to support companies 'and allow time for economic recovery', as well as promoting initiatives to 'avoid a solvency crisis'.
'We have been very imaginative and though up measures which, like the previous ones, had not been done in the past. From direct aid to companies that have suffered a significant drop in sales, to public-private support', Sevilla said, noting that, 'it is very important to take action and to help viable companies to overcome specific problems'.