Spain’s banking sector and, in particular, savings banks, have been undergoing a deep restructuring process since 2009 under the Bank of Spain’s supervision. This restructuring has included a highly significant integration of entities, financial activities of the majority of savings banks performed through banks, progressive reduction of surplus industry capacity (particularly the office network and central services of entities in the integration phase) and changes in many executive teams. Three savings banks have also been placed under the Bank of Spain’s administration.
The European banking industry, and particularly Spain’s banking industry, is subject to strong economic pressures (very low interest rates, reduction in volumes, write-down of assets, etc.) and regulatory pressures (need for more and better capital, increased liquidity requirements, etc.) which are affecting net interest margins and profitability. In this context, entities are endeavouring to enhance efficiency by increasing revenue and cutting costs. In Spain, the supervisor is highly aware of this objective and is favouring fulfilment.
Responsibilities for the economic crisis extend not only to financial entities but also to supervisory bodies and financial regulations themselves. This has been recognised by the G20 and by numerous international institutions, resulting in the approval of a highly ambitious regulatory reform plan: increase in the solvency and liquidity of financial institutions; restrictions on leverage; specific treatment of institutions having systemic relevance; recovery and liquidation plans for entities; control over remuneration; tighter regulation of the so-called "shadow banking"; better protection for investors and, in general, for financial customers; etc.
All financial institutions wish to place the customer at the centre of their strategy and business model. Business is unlikely to be sustainable if this approach is not adopted. Nonetheless, possible improvements are observed in customer segmentation and knowledge; in the use of multi-channel structures (particularly for certain customer groups); in the pricing of products and services (a need for greater personalisation and discrimination); etc. Additionally, banks must take all steps possible to overcome the current lack of confidence in their services on the part of consumers/investors. Regulators are also seeking to increase customer/investor protection through regulations such as the MiFID reform, the Consumer Credit Directive, the future Mortgage Directive, etc.
The economic and regulatory context is putting extraordinary pressure on banks, which are responding in different ways: seeking increased profitability (divestment of non-core businesses, sale of unprofitable assets and reduction in operating costs), maximising the use of capital and minimising risks. It appears clear that all decisions taken in these areas must form part of a specific strategy to successfully overcome the challenges faced in the industry’s new reality. This new strategy will reflect the need to reflect on aspects such as distribution models, business areas, product and service offerings, growth factors, corporate governance, risk management, etc.