Jaime Sáenz de Tejada: “Spanish non-financial corporates and households have cut their leverage by more than the European average”
“Since the global financial crisis, Spanish non-financial corporates and households have cut their leverage by more than the European average,” said BBVA’s Global Head of Commercial & Institutional Client Solutions, Jaime Sáenz de Tejada. In his opinion, this has given the banking sector in Spain “robust growth margins and a highly resilient model.” At an event organized by AEB and CECA in Frankfurt on Tuesday, Sáenz de Tejada pointed to “diversification as one of the keys to the success of Spanish banking.”
Sáenz de Tejada has also linked this success to the prudence of the Spanish banking model, based on close relationships with enterprises and conservative risk management. In the case of BBVA, “80 percent of our incoming capital is concentrated in credit risk,” he said. "We take on very little market or equity risk. It’s a finely granular exposure, very easy to model, measure, and assess. We have robust resilience, as proven in all the cycles we have gone through," explained Sáenz de Tejada.
"The strength of the Spanish banking model lies in its diversification: by geography, customer base, and product range."
In his opinion, the strength of the Spanish banking model lies in diversification. On the one hand, geographical diversification: a varied international presence acts as a counterbalance to exposure to different markets. And, on the other hand, customer diversification, through a universal banking model with retail customers, companies, and institutions. Finally, product diversification: in addition to pure banking, the sector also includes asset management, insurance, private banking, and more. In short, this combination acts as a natural stabilizer of income and risk and provides greater resilience in the face of economic and geopolitical crises.
BBVA's Global Head of Commercial & Institutional Client Solutions highlighted that the geographical and business diversification of Spanish banks has been key to sustaining business financing in times of stress. “More than 50% of Spanish banks' consolidated assets and profits come from outside of our country,” which has allowed them to continue supporting investment and growth in Spain. In his opinion, it is very positive that exposure in Latin America tends to be highly correlated with the US economy, while on the European side, in the case of Spain and Portugal, it tends to be more correlated with the European Union.
The impact of regulation
During his presentation, Jaime Sáenz de Tejada also warned that overly stringent regulation could diminish the financial system’s ability to support economic growth: “It’s not about relaxing supervision, but about adjusting it in a more balanced and proportionate way—improving the way it’s calibrated, ultimately.”
BBVA’s Global Head of Corporate Banking explained that while regulation is essential to ensure system stability, it must not lead to unintended consequences such as restricting credit to sound households and businesses or unnecessarily raising borrowing costs. In his view, balanced supervision that adapts to the prevailing economic landscape is key to maintaining a constant flow of credit to the productive economy, thus boosting investment and enhancing competitiveness in Europe. While proper regulation is crucial, when applied in an overly defensive manner, it can become a brake on innovation and place us at a disadvantage compared to more flexible and predictable jurisdictions.
The event, titled ‘The strengths of the Spanish banking system in a global transition context,’ featured contributions from, among others: Alejandra Kindelán, Chair of the Spanish Banking Association (AEB); Pedro Machado, member of the Supervisory Board of the ECB’s Single Supervisory Mechanism; Ramón Quintana, Director General of Systemic and International Banks at the ECB; Luis Teijeiro Pita Da Veiga, Director of Regulation and Research at CECA; José Antonio Álvarez, Vice Chairman of Santander; and Matthias Bullach, Head of Accounting, Management Control and Capital at CaixaBank.