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Economy and Finance 17 Jun 2024

Carlos Torres Vila: “BBVA’s transaction with Sabadell represents a clear commitment to SMEs”

BBVA Chair Carlos Torres Vila and Spanish Minister of the Economy Carlos Cuerpo launched the 41st edition of the APIE Seminar in Santander, Spain on Monday. The event focuses on the role of companies in the new economy. In his presentation Torres Vila emphasized BBVA's support for Spanish businesses, particularly SMEs, which he identified as key drivers of the country’s growth and development. Specifically, he said, “our view of the importance of SMEs is one of the reasons for the offer we presented to Banco Sabadell shareholders a little over a month ago,” as the bank holds a strong position in this segment. “The transaction represents a clear commitment to SMEs, and will further reinforce our commitment to this kind of businesses,” Torres Vila stated.

Carlos Torres Vila: “La operación de BBVA con Sabadell es una clara apuesta por las pymes”

We want to build on Banco Sabadell’s excellent work. Therefore, once the merger is complete, we are firmly committed to maintaining Banco Sabadell's risk management model for small and medium-sized companies. In fact, unless there is a scenario of financial impairment, BBVA will maintain the working capital lines of all small and medium-sized companies for at least 12 months," Carlos Torres Villa announced.

The BBVA Chair described the main challenges businesses currently face. First,  a constantly evolving context, shaped by geopolitical events such as the U.S.-China rivalry, and Europe's shifting role globally. Additionally, the changes in the economic and technological landscape, especially robotization and artificial intelligence, all amid rising protectionist pressures.

“These challenges are the focus of the Letta Report on the future of the Single Market, which was commissioned by the EU Council under the Spanish Presidency and released a few weeks ago. The report points to the need for greater scale to ensure progress and competitiveness in Europe, especially in the financial sector, and calls for action to strengthen the European Union and the single market,” he said.

Among the challenges Letta underscores in his report, Carlos Torres Vila focused on two: innovation and sustainability. For BBVA, these challenges represent an opportunity "to achieve greater competitiveness and boost economic growth."

With regard to sustainability, the BBVA Chair feels that European companies should undertake transition plans to reduce their emissions, and “SMEs are no exception.” In order to ensure the success of this transition, companies have rising support from the public sector through programs such as the European NGEU funds, which come with a commitment to reforms that encourage private investment. “At BBVA, one of our priorities as a bank is to support our clients in their transition plans, both with advice and financing,” Carlos Torres Vila asserted.

In 2023, BBVA channeled over €70 billion toward sustainable business, double the amount from two years ago and five times more than five years ago. “Much of this growth stems from businesses’ commitment to sustainability. Proof of this is that sustainable financing for these companies doubled in 2023,” explained the BBVA Chair. He emphasized that developing and adopting new clean technologies, known as "cleantech," is crucial to decarbonizing activities that currently lack efficient sustainable alternatives—something in which BBVA is already investing.

Carlos Torres Vila: “La operación de BBVA con Sabadell es una clara apuesta por las pymes”

The BBVA Chair reminded the audience that beyond digitization, we are experiencing an unprecedented wave of disruption known as the fourth industrial revolution. In this context, “artificial intelligence stands out for its potential to become a technology of general utility, with the ability to revolutionize virtually all productive sectors,” he said. He emphasized that companies must make substantial investments to fully harness the potential of AI. “At BBVA, we have entered into strategic agreements, such as the one we recently announced with OpenAI for 3,000 ChatGPT licenses for employees,” he added.

Carlos Torres Vila expressed his appreciation of the efforts made by Spanish SMEs to adopt digital technologies. But he pointed out that "we still have some way to go" to close the R&D investment gap between Europe and the world's leading economies, and between Spain and other developed economies like Germany and the United States.

The BBVA Chair remarked that, although for two centuries Europe was a touchstone for innovation, “the trend in recent decades shows that we are falling behind” compared to other economies, such as China or the United States. The EU is attempting to respond to this situation through institutions such as the European Investment Bank (EIB) and the Next Generation EU (NGEU) funds, which are “vital for the recovery and for driving innovation.” He also singled out the Spanish Ministry of Economy’s Plan for the recovery and to champion the green and digital transition and the imminent creation of the National Productivity Council.

In the current economic and technological context, the BBVA Chair feels that greater collaboration between the public and private sector is essential in order to attract investment and channel it to Spanish businesses through the financial sector. This is particularly important in Spain, where the vast majority of companies - over 99.8 percent - are small and medium-sized enterprises. In fact, SMEs and the self-employed are responsible for more than 60 percent of jobs in this country. Carlos Torres Vila stressed that “a strong financial system is key to supporting public programs and amplifying their impact by channeling additional funding.” ICO loans during the pandemic were an example of the success of public-private partnerships, with banks “working hand in hand with the government to prevent the loss of the productive system.”

Banks play an essential role within the wider economy: they promote economic growth by directing savings toward productive investment. “At BBVA, we support Spanish businesses, and particularly SMEs - the driver of growth and development in the country,” he added. Accordingly, during last year the bank added 70,000 SMEs and 64,000 self-employed workers, and in the first four months of 2024 we have increased the pace of adding new customers by 10 percent.

Furthermore, he emphasized that “it is the obligation of public and private institutions to ensure that the benefits of digitization and sustainability reach everyone.” In his opinion, Spain must act on two fronts: first, it must invest in education, and, second, on promoting initiatives to foster financial inclusion among all segments of the population.

To conclude, the BBVA Chair referred to the importance of designing “effective economic policies, stable regulatory frameworks and public-private partnership strategies to boost investment,” which will allow Spain to “unlock the opportunities stemming from innovation and sustainability to compete successfully within a global market.” In his view, banks play a pivotal role in amplifying the effect of these measures and ensuring that they reach businesses, the self-employed and families. In doing so, “we not only contribute to the economic success of our country, but also to a more inclusive and sustainable future for all,” he said.