Spain’s savings banks will suffer a 35% cut until 2015

Spanish Confederation of savings banks or cajas (CECA, acronym in Spanish) Chairman, Jose Maria Mendez, said on Monday the savings banks or cajas will suffer a 35% downsizing of offices and personnel until 2015 compared to 2008 data. According to Mendez, until now the downsizing has been of 20.5% of the offices and 19,6% of staff members.

Mendez pointed out that the entities attached to the Confederation have continued its restructuring process in 2012 “with accelerated pace”, so the sector has gone from having 45 entities with an average volume of assets of EUR 29,000 million in December 2009, to 14 entities with volume groups have average assets of 84 billion.

Throughout this time, there has been an intense renovation of the management teams, with new ways of understanding the business, according to Mendez, who pointed out that this process “is serving as a catalyst for the reduction of installed capacity that existed in the Spanish financial sector.”

However, he believes “a lot more has to be done in the sector”, and the change of structure is a crucial element in the new market. “CECA is engaged in a rapid and timely transformation of its structures,” he stated. Thus, through Cecabank, it aims to continue with payment services, Treasury activities and support services. In fact, it maintains a core tier 1 of 18.4%.

The reform of the savings banks law is still pending. According to Mendez, a forced sale process would “lead the institutions to value losses.”

He disagrees with the incompatibility established between patron and advisor and the proposal to limit the decision to deliver dividends, because this could hinder the entry of new shareholders.

Mendez showed his support to the European banking union, which would allow the ECB to co-ordinate national supervisors. However, he said “other pillars should not be dismissed.” As for the future, he warned of the need to keep track of the new stress test in the last third of the year to avoid “what happened two years ago” with the first tests Spain had to take.