The president of BBVA, Carlos Torres Vila, has assured that, despite its complexity, 2020 has been a year of “relevant strategic achievements” and has affirmed that the entity faces 2021 “with unparalleled strength” to invest in growth and to increase shareholder remuneration. This was revealed in an interview published on the BBVA corporate website, in which Torres Vila takes stock of 2020 and offers his vision for next year.
In this sense, and after the recent sale of the United States business and the decision of the European Central Bank (ECB) regarding the payment of dividends, considers “a relevant share buyback as a very interesting option” to remunerate the shareholder. Torres Vila highlights the importance of sale of the franchise in the United States and the «enormous value» of the operation.
As highlighted, BBVA is prepared, therefore, to “face the difficulties that may continue to come”, but also to invest “profitably in the markets where it has leadership and to increase the return to its shareholders. “At its core, it is an operation that demonstrates BBVA’s commitment to generating value for shareholders,” sums up Torres Vila, who, in this regard, considers the updating of the ECB’s recommendation regarding dividends.
As of September 2021, as he points out, the dividend policy of European banks is normalized, “something very necessary.” “We already said when we announced the sale of the United States that we contemplated as a very interesting option, in addition to dividends, a relevant buyback of shares,” he says. Torres Vila indicates that at the current prices of the bank’s shares it is still “A very interesting alternative for shareholder remuneration”.
The Chairman of BBVA also refers to the reasons that led to the termination of negotiations with Banco Sabadell for a potential merger. « It was a good example of investing in markets where we have leadership and where we can generate shareholder value. It has not gone ahead because we have not reached an agreement on economic terms, “he adds.
Likewise, Torres Vila rules out expanding the entity’s presence in Turkey: “The position we now have in Garanti allows us control, allows us to manage the bank, and we do not contemplate any change” in the current stake, which amounts to 49.85%.
An “uncertain” situation
On the other hand, Torres Vila describes the economic and health situation with an adjective: «uncertain». While he speaks with some optimism about the vaccine, he also asks for prudence about when “the immunity that is necessary to return to normality” will occur. Now, as he points out, “it is important to maintain rigor in the application of the measures.”
Regarding the economy, it foresees a “rebound” in economic growth in the second half of the year, but an uneven recovery between regions, where countries such as China, the United States or Turkey will recover their GDP next year, while other areas such as Europe or South America will probably have to wait until 2022. This is also the case in Spain, he says.
The president of BBVA emphasizes that the country should encourage private investment to generate economic growth, employment and well-being.
In his opinion, to encourage this investment, trust must be generated through four channels: institutional stability, regulatory predictability; a fiscal system that does not distort decision-making and that is efficient, and maintain the stimuli from the authorities, which “have worked well in 2020 and are still necessary”, both the monetary ones that the ECB has launched , like the prosecutors in Spain. It also considers necessary “reforms that attract private investment”, in line with the recommendations of the European Commission.
Along the same lines, as a fifth recommendation, it highlights the need to generate “incentives for additional private investment.” And this, in his opinion, “links well with European funds.”
Torres Vila estimates that the focus on the investment of these funds together with private capital should be on several axes such as sustainability, inclusive growth, digitization to modernize the Spanish economy towards data, and “that they be programs with a broader spectrum that reach small and medium-sized companies, the self-employed and families.”