Carlos Torres Vila (BBVA): “Shareholders should have the final say on the consolidation processes currently taking place across Europe”
BBVA’s Chair, Carlos Torres Vila, took part this Friday in the annual forum of the Spanish Banking Association (AEB), where he underscored the need to make further progress toward European financial integration to create institutions with greater scale: “The return of mergers and acquisitions within Europe is a positive development,” he proclaimed. In his view, “it is important for investors and shareholders to have the final say on the consolidation processes currently taking place within Europe, as indeed should happen in a properly functioning capital market.” He also called for a regulatory environment that fosters competitiveness, in addition to financial stability: “Regulation must be an enabler of growth,” he explained at a round table discussion alongside the CEO of Banco Santander, Héctor Grisi, moderated by the president of the AEB, Alejandra Kindelán.
Carlos Torres Vila underlined the key role played by bank financing at this critical juncture in Europe, with a global scenario marked by geopolitical uncertainty: “As banks, our role is to finance the future of Europe and it is essential to face the challenges that lie ahead,” he said.
In his view, “Europe is falling behind because of fragmentation, an inflexible regulatory framework and poor productivity growth, which has a lot to do with insufficient funding.” He stressed that Europe must invest in the energy transition and technological transformation, in infrastructure and in strategic autonomy and defense.
More precisely, according to the report published by Mario Draghi, the European Commission estimates that the region needs between 750 and 800 billion euros per year to modernize its infrastructure, boost the technological transformation and make further progress towards the energy transition. “Bank financing is essential in order for this investment to happen,” he said.
In this context, he remarked that European companies need more scale to be competitive: “Europe needs larger and more competitive banks to sustain economic growth and innovation.”
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he BBVA Chair remarked on the profound transformation that the financial industry has undergone in recent years, as reflected in certain key indicators such as digital customer acquisition and sales through digital channels. The immediate consequence of this and other trends is that the necessary investments in technology are becoming increasingly costly. Carlos Torres Vila anticipates that this trend will increase due to the emergence and relentless growth of new technologies such as AI and the requirements of the new DORA legislation in Europe on protection against fraud and cyber-attacks. “Hence the need for further scale,” he stressed.
He also noted that currently no eurozone bank ranks among the 20 largest in the world measured by market capitalization, while digitization and competition from non-European tech giants is ramping up pressure on the sector.
In his opinion, banking consolidation should be a strategic priority for the EU. “The return of mergers and acquisitions (M&A) in Europe is a positive development. Before embarking on cross-border mergers, it is essential to build strong domestic banks,” he argued, adding that “It is important for investors and shareholders to have the final say on the consolidation processes currently taking place across Europe, as indeed should happen in a properly functioning capital market.”
BBVA calls for a regulatory framework conducive to growth and competitiveness
On the subject of regulation, Carlos Torres Vila insisted that in order for European banks to achieve the necessary scale, further progress must be made toward the Capital Markets Union (CMU) and the Banking Union. On this point, he reiterated the need for a common deposit guarantee scheme and an effective funding tool for bank resolution.
The BBVA Chair was adamant that “regulation must be conducive to growth and competitiveness in Europe.” In addition to financial stability and security, he called for “a more strategic approach to regulation, thus paving the way for a more streamlined regulatory framework.”
Regulation, as an enabler of investment in sustainability and innovation
Carlos Torres Vila recalled that sustainability is an unstoppable business opportunity, despite the uncertainty stemming from the change of administration in the United States, seeing as though the transition to a sustainable and profitable model calls for massive investment. As to what can be done to improve regulation in this regard, he considers it crucial to embrace a more comprehensive and holistic vision, with incentives that genuinely encourage investment.
When asked about the impact of artificial intelligence in banking, the BBVA Chair remarked that its applications are manifold, from process automation to its ability to analyze trends and personalize services and interactions with customers. On the subject of how AI should be regulated, he stressed that it is essential for the authorities to strike a balance between security and development: “Europe has already taken its first steps in regulating AI, and it is important that we take a pragmatic and innovation-friendly approach,” he explained.
The forum ‘Financing the Future of Europe. The Role of the Banking Sector’ forum, organized by the Spanish Banking Association (AEB), brought together leading figures from the financial and regulatory worlds. Participants included Maria Luís Albuquerque, European Commissioner for Financial Stability, Financial Services and the Capital Markets Union; José Luis Escrivá, Governor of the Bank of Spain; and Carlos Cuerpo Caballero, Minister of Economy, Trade and Enterprise.