Should the banking market in Spain become even more concentrated?

Spain has made very significant efforts in terms of concentration. From the year 2008 until today, we have gone from fifty-four financial entities to fifteen, and this has happened alongside great efforts to reduce costs. Approximately 30 percent of bank branches have closed over the last six years, and banking staff numbers have also been reduced in a similar proportion. So the Spanish financial system has done what it had to do. But it is true to say that we are now in a new environment, that of the European banking union, which is characterized by extremely low—extraordinarily low—interest rates. In this context, the challenge for all banking entities is to achieve acceptable levels of profitability. In this environment, banks and financial institutions in general face a greater concentration, which will allow them to achieve new cost savings and ultimately shape a more efficient banking system.

How can competition be guaranteed with fewer banks?

In the United Kingdom, there has been a concentration process that has left the country with four main players. But there is still a decent level of competition. In Spain, the concentration process we have experienced in recent years has really had no effect on competition whatsoever. This is due to a series of reasons: today, Spaniards have the cheapest mortgages in the whole of Europe when compared to the Germans, French, and Italians. This ultimately underlines the process of competition that we have in the Spanish financial system. So I don’t believe that further concentration will necessarily lead to less competition.

Can there be a European banking union without pan-European banks?

I am convinced that over the medium term, over the next three years, we will probably see some pan-European banks being founded.

Do we need to reduce the excessive bankization of enterprises, currently at 90 percent?

The model of financing that we have in continental Europe is different to that of the Anglo-Saxon world, but it will change over time. European entities are interested in fostering the development of capital markets and in ensuring that companies can access them as a complementary option to bank finance. Banks themselves are also interested in ensuring this process happens because it has advantages for banks, given that it will introduce market discipline. It is a healthy process and banks should not obstruct it; on the contrary, we should encourage it.

How can venture capital be encouraged in this country, given that it is so essential to innovation and entrepreneurship?

In general, the answer has always been to go down the route of giving tax breaks to venture capital. But I do not think that this is the solution over the medium and long term. Businesspeople have to accept that an increasingly large proportion of their financing will have to come from capital markets, and venture capital is probably a first step toward helping smaller businesses grow and obtain alternative finance to complement bank financing. During the last two years, we have seen an increase in investment from foreign sources in general, in the form of private equities and other kinds of funds, which signals the route we will go down. There have also been initiatives from the state working through the ICO, the state-owned bank, with the launch of funds to be incorporated into venture capital companies. It is going to be a slow process.