BBVA holds a conference with Felaban, the Latin American banking employers' association
The Latin American Federation of Banks (Felaban) organized its 2nd regulatory meeting in Madrid. The employers' association, which gathers the main banking associations in the region, participated in a working meeting with BBVA executives where they analyzed the outlook for Latin America post-pandemic.
This morning, BBVA gathered the main representatives of Latin American banking at its headquarters in Ciudad BBVA, Madrid, to discuss the challenges facing Latin America in the coming years. The delegation included representatives of the banking associations of Mexico, Colombia, Peru, Uruguay, Costa Rica, Panama, Venezuela and Bolivia, and was headed by Beltrán Macchi, president of Felaban and vice-president of the Paraguayan Banking Association. The Spanish Banking Association (AEB) was also in attendance.
Representing BBVA, Jorge Sáenz de Azcúnaga, head of BBVA Country Monitoring, welcomed the guests and shared the keys to the current situation in Latin America.
The executive indicated that although 2020 was a very tough year for the region, with an 8.9% drop in GDP and a very significant socioeconomic impact, there are still reasons for optimism. "In the short term we believe that there are clear tailwinds for GDP, such as commodities or global growth, not to mention the potential for long-term growth." In this sense, he added that BBVA has become a reference internationally thanks to its presence in Latin America, a region with enormous growth potential, where it has leading franchises in markets such as Mexico, Peru, Argentina and Colombia.
“BBVA's global image could not be fully understood without its presence in Latin America.”
On the other hand, the executive noted that the low level of banking penetration (more than 40% of the adult population does not have a bank account) offers enormous opportunities, together with the demographic factor of having a very young population. On this point, Sáenz de Azcúnaga mentioned that Felaban, banking associations and banks "have an enormous responsibility" to continue providing society with financial services. "During the crisis, we banks have supported our customers, with moratorium programs, greater flexibility and government support initiatives, but we have also worked to try not to reduce banking penetration in the region," he reiterated. In the future, he added that digitalization should be one of the key drivers of banking penetration in the region.
Economic outlook for Latin America.
Jorge Sicilia, Chief Economist of the BBVA Group and Director of BBVA Research, analyzed the economic outlook for both the region and the world's main economies, which are still affected by uncertainty. For Sicilia, a key highlight in Latin America is the vaccine program, which has accelerated and could present percentages similar to those of developed countries by the end of 2021.
Looking ahead, Jorge Sicilia expects an economic scenario with a rapid recovery, higher inflation and increasing challenges for central banks. Sicilia foresees that the convergence towards "normality" will be a slow process and will occur first in developed countries and later in emerging countries, with solid growth in 2021 and somewhat more moderate growth in 2022.
He recalled that Latin America was already the region with the lowest growth before the pandemic, which made moving forward with structural reform all the more urgent. In that sense, long-term growth between 2% and 2.5% would not be enough to reduce the gap in per capita income compared to developed economies. The economist foresees a stronger recovery than expected this year in the region, which would allow GDP to reach pre-crisis levels by the end of 2021 in countries such as Colombia, Chile and Brazil.
Jorge Sicilia, from BBVA Research during its invertention
Regulatory and Supervisory Challenges in the Region
The meeting also offered an opportunity to assess the regulatory and supervisory risks faced by financial institutions. Santiago Fdez. de Lis, Head of Regulation at BBVA, explained how due to the extraterritoriality of EU regulations, European financial institutions are required to comply with the same requirements that apply in their countries of origin in other markets. One of these examples is the regulatory equivalence process that “places foreign banks at a disadvantage compared to local banks.” For Fdez.De Lis, another consequence of extraterritoriality is that it hinders financial inclusion, the development of the local capital market and foreign direct investment in emerging countries.
Regarding digital , BBVA’s Head of Regulation underscored the need for a level playing field. Despite progress in regulations affecting new service providers (especially in payments), "there are still asymmetries between incumbent banks and fintechs, even in areas such as the prevention of money laundering or consumer protection, where rules should be consistent, but there are still some regulatory gaps or supervisory intensity is uneven,” said.
Eduardo Ávila and Matías Viola, from Global Supervisory Relations, BBVA, discussed the main supervisory issues that banks such as BBVA face. In this regard, they recalled that the European Central Bank (ECB) became in 2014 Europe’s highest bank oversight authority, directly supervising the 114 systemically important players in the participating countries, which manage almost 82 percent of the total bank assets in those countries. Given the large number of supervisors that international financial institutions have to interact with, BBVA experts consider that it is essential to “intensify communications between supervisors” in order to increase the flow of information between authorities
Sustainability, a key element for banks
Finally, BBVA Global Head of Responsible Business Toni Ballabriga focused on sustainability as a strategic driver for financial institutions. BBVA was one of the first banks in the region to prioritize actions to combat climate change and promote inclusive growth .
The meeting concluded with a visit to Ciudad BBVA, where Felaban representatives learned about details of the architectural complex that houses the Group's headquarters.
A cybersecurity workshop was held at the headquarters of the Spanish Banking Association. BBVA Head of Corporate Security Álvaro Garrido was one of the guest speakers at the workshop. He was joined by Mónica María Gómez Villafañe, Executive and Financial Vice-President, Asobancaria and Diego Tovar, CIO-Technology vicepresident, Scotiabank Colpatria discussed the essential role of digitization and cybersecurity for banks during the pandemic and how they must be leveraged as drivers of value going forward. The discussion panel was moderated by Giorgio Trettenero Castro, secretary general of Feleban.
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