The complicated legacy of Francisco González after his long stint at BBVA | Economy

The complicated legacy of Francisco González after his long stint at BBVA | Economy


After 19 years at the helm of BBVA, it is likely that Francisco González Rodríguez (Chantada, Lugo, 74 years old) would never have imagined that he would leave the entity at a time so convulsive for the sector and as hard for its shareholders as the current one. The bank, which has managed to survive the crisis and remains among the world's largest banks, has dropped more than 30% on the stock market this year, something that González will be very aware of, which was an exchange and stock exchange agent and has 4.5 million shares of the entity.

The most veteran banker, with an executive position, left this Friday definitively the reins of the bank. He did not wait for 2019, after the shareholders' meeting, as he himself had suggested. González was named co-president of BBVA, together with Emilio Ybarra, 19 years ago, in October 1999, after the merger of BBV and Argentaria. Two years later, in December 2001, after the scandal of the secret accounts of Jersey, he remained the sole president.

Weeks ago, he commented that he has not left before because he did not have the right successor. Now he does: he is Carlos Torres (Salamanca, 52 years old), who has been with the bank for 10 years and three as CEO. Towers –who will share the power with the new CEO, the Turkish Onur Genç– he is not a typical banker, but rather a highly qualified engineer, former financial director of Endesa and a consultant at McKinsey.

The bank that Torres will inherit is worth 31,000 million in the Stock Exchange, half than its eternal competitor, Santander. When González became sole president of the bank in 2001, BBVA was 642 million more valuable than its rival, despite being smaller. But since then the entity has lost about 13,000 million worth of stock, with a 66% decrease in the price and a total return for the shareholder of -26%, including dividends distributed; the shareholders of the European financial sector have lost 31%. Those of Santander, although their share has fallen by 56%, have won a total of 26%, including dividends.

The complicated legacy of Francisco González after his long stint at BBVA

In this period, BBVA, based in Bilbao, has experienced the greatest economic boom and the most devastating crisis in Spain and the markets where it works: Mexico, South America, the United States and Turkey. Now, Torres BBVA should navigate in a hyper-regulation environment, in which supervisors have tripled the capital requirements, with the consequent drop in profitability, in a sector that suffers the loss of social reputation and in the process of digital transformation in which BBVA has achieved important milestones, but investors still do not value it.

Sources of the market say that "in the fact of González, which is not little, it has survived the crisis and has taken advantage of it to gain market share in Spain by buying broken boxes". They also remember that "it has adjusted templates without labor conflict".

A very changing dome

However, among the long list of former directors, some reproach so much movement in the dome. "BBVA has suffered the greatest loss of talent in the sector: it has relieved two CEOs, José Ignacio Goirigolzarri, current president of Bankia, and Ángel Cano; In addition, two other exBBVA, Jaime Guardiola and José Sevilla, are CEOs of Sabadell and Bankia. In parallel, two directives have gone, "says Carmelo Tajadura, former deputy general director of BBVA until 2007. These departures have involved compensation of at least 140 million.

The exejecutivos and union sources coincide in remembering that despite the poor stock market performance under his mandate, Gonzalez will receive a pension of 79.7 million on January 1. "This remuneration has not been related to the profitability of the bank or the evolution of the value, as stipulated by good corporate governance standards," say those who are no longer in the bank and ask for anonymity.

On the contrary, from some financial companies remember that Gonzalez has not had the opposition of the big investors, neither in his reelection of mandate nor by his pension (Blackrock has almost 6% of the capital).

Digitization, the highest priority

Digitization has been the cornerstone of Gonzalez's strategy, which started as a programmer at IBM in 1964, and has achieved international recognition at the highest level. However, in the early years he invested a lot of money in systems that became obsolete, as he has admitted.

In a few days of the IESE, Álvaro Serrano, CEO of Morgan Stanley, commented that BBVA "is a leading bank in the world in digital transformation, but investors question how much more it will have to invest to defend itself from the bigtech, Amazon, Google, Facebook, and the doubts about Mexico and Turkey weigh a lot. " José María Abad, CEO of Goldman Sachs, added in the same conference that the market "is pending the digital development of BBVA, but does not value it; Maybe I should give more information "about the investment and what it gets," he added. Both executives recalled that the level of capital of BBVA is lower than that of other competitors.

His critics, among which is the association of former employees of BBVA, Uniter, which has been reprimanded by Gonzalez, believe that has decompensated investment in technology, "announcing a transformation that is not yet perceived as differentiating against competitors." In fact, CaixaBank affirms that it is a leader in the penetration of digital customers in Spain.

There are also some doubts in their investments in China, the US and, above all, Turkey. "It's a country on the verge of a recession that could be worse than Spain's in 2008," according to Ignacio de la Torre, Arcano's chief economist. The bank still lives on the strength of Mexico and South America, which generate more than half the profit, and which were bought before the sole presidency of González.

Fernando de la Mora, the head of the consultancy Alvarez & Marsal in Spain, says that the banker "opted for the group's exponential growth; he is a visionary who anticipated the process of digital transformation, has attracted talent and has changed the corporate culture ", point out from this firm that he has worked with BBVA.

In an interview conducted by the bank, González says that the technological transformation has been the constant axis in his life. "I've always looked forward. The future has interested me more than the present. " That is what his shareholders reproach him for, although he believes that the fruits will be reaped soon, when BBVA is "the financial Amazon".

The mandate twice prolonged

FG (as it is known in the financial world) reaches 2018 after twice changing the statutes of BBVA to extend its mandate. On December 20, 2007, at 63 years, he extended the limit of the presidency to 70, compared to 65 stipulated. Then, the financial world was leaning into the abyss, but the great debacle had not yet arrived. The BBVA was trading at 17 euros.

On December 23, 2011, the age limit was again modified to 75. The storm had already broken out, but the worst was still left for Spain, with the bank rescue of 2012. The BBVA was trading at seven euros. He could have left, but he said he did not because he did not have the team or the right successor. Now the time for change has arrived.

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