Francisco González

Francisco González

Francisco González

Chairman and CEO

Banco Bilbao Vizcaya Argentaria (BBVA) SA

Francisco González has been Chairman and CEO of BBVA since 2000. Prior to that he was Chairman of Argentaria and before that he founded the Securities Firm, FG Inversiones Bursátiles.

He is a member of the Board of Directors of The Institute of International Finance (IIF), member of the European Financial Services Round Table, member of the Institut International D'Études Bancaires, member of the Capital Markets Consultative Group of the IMF, member of the Board of Directors of the International Monetary Conference, member of the Global Advisory Council of the Conference Board and member of the International Advisory Committee of the Federal Reserve Bank of New York. He holds several governorships in the arts and charity sectors.

Francisco is also a registered Spanish Stock Broker and Trader for the Bolsa de Madrid. He was a member of the Executive Committee of the Bolsa de Madrid and the Executive Committee of Bancoval. He began his professional career in 1964 as programmer in an IT company.

 

Quotes

Francisco González

Francisco González

Chairman and CEO, Banco Bilbao Vizcaya Argentaria (BBVA) SA

At an international level the main problem at the moment is Europe’s sovereign debt crisis, which is not only affecting Europe, but also the United States, Asia and emerging markets.

Francisco González

Francisco González

Chairman and CEO, Banco Bilbao Vizcaya Argentaria (BBVA) SA

Several of the European countries that have had the most serious spending problems now have new governments that are determined to take action.

Francisco González

Francisco González

Chairman and CEO, Banco Bilbao Vizcaya Argentaria (BBVA) SA

As regards the United States, it would be very positive if the internal political rivalry between the Republicans and the Democrats in relation to economic policy is resolved.

Francisco González

Francisco González

Chairman and CEO, Banco Bilbao Vizcaya Argentaria (BBVA) SA

The economic and political crisis is very serious, but we will pull through.

Francisco González

Francisco González

Chairman and CEO, Banco Bilbao Vizcaya Argentaria (BBVA) SA

The weaker banks need to disappear because, aside from failing to do their job of providing credit, they weaken the rest of the system.

Francisco González

Francisco González

Chairman and CEO, Banco Bilbao Vizcaya Argentaria (BBVA) SA

Spain is about to enter a new phase with a strong Government that has four years ahead of it and the support of its people.

Francisco González

Francisco González

Chairman and CEO, Banco Bilbao Vizcaya Argentaria (BBVA) SA

The strategy is very clear and we’ve stuck to it throughout the crisis: keep working on our priority of evolving to the banking model of the 21st century.

Francisco González

Francisco González

Chairman and CEO, Banco Bilbao Vizcaya Argentaria (BBVA) SA

We have a very powerful technology drive and, with the rules of play set to change in the near future, we are now in a differential position.

Francisco González

Francisco González

Chairman and CEO, Banco Bilbao Vizcaya Argentaria (BBVA) SA

It will no longer be necessary to have a large physical network in order to enter a market; new models, for example, allow different kinds of players to have a very strong virtual presence.

Francisco González

Francisco González

Chairman and CEO, Banco Bilbao Vizcaya Argentaria (BBVA) SA

The idea that banks need only conventional people no longer holds true. If we really want to compete in the future, we need to update the qualifications of our people and that’s where talent comes in.

Francisco González

Francisco González

Chairman and CEO, Banco Bilbao Vizcaya Argentaria (BBVA) SA

All our management and staff know full well that we are onto something big and that in the future we may no longer be called a bank. Nowadays, some companies provide information, others credit but, at the end of the day, the borders will become blurred and all of us will be competing for customers. So, getting a client and transforming information into knowledge is where the battle will be fought.

 

Read interview transcript

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What is your view of the present European situation and the international context in general?

At an international level the main problem at the moment is Europe’s sovereign debt crisis, which is not only affecting Europe, but also the United States, Asia and emerging markets.

I think the Euro is here to stay.

Several of the European countries that have had the most serious spending problems now have new governments that are determined to take action. Greece and Italy have very capable, serious prime ministers who, despite being under close scrutiny from a political standpoint, are determined to press ahead. In Spain, voters have backed the country’s Popular Party and its leader Mariano Rajoy with a clear majority to do what it takes to restore Spain’s confidence and put it back on the path of growth. Ireland and Portugal, although not without difficulties, are also making progress. Germany, France and the rest of the European Union need to advance with their negotiations in order to strengthen the euro and dispel the existing uncertainty, inject liquidity into the system, enable the European Central Bank to take the necessary steps and ensure that the countries of the EU commit to as many reforms as may be necessary. As regards the United States, it would be very positive if the internal political rivalry between the Republicans and the Democrats in relation to economic policy is resolved.

The economic and political crisis is very serious, but we will pull through. The world will keep growing and the push of the emerging markets will continue; it is therefore important for Europe to be prepared.

In the Spanish case, what measure, supposing you had to choose one, should be the first the new Government takes?

Stabilising the financial system. To do so it’s important to identify the weak banks, clean their balance sheets, restructure them and ensure that stronger banks with sufficient capital, liquidity and management capacity take them over. That way, when only solid banks remain, Spain’s financial system as a whole will also be strong. The weaker banks need to disappear because, aside from failing to do their job of providing credit, they weaken the rest of the system.

How is BBVA coping with such an unstable environment? What’s the level of BBVA’s confidence in the year ahead?

Spain is about to enter a new phase with a strong Government that has four years ahead of it and the support of its people to do what is needed.

What Spain does is also important for Europe. Spain could trigger a positive change for Europe.

2012 will be a difficult year as the medicine has to be administered but if we do it well, 2013 will be better. I think the markets will anticipate this and, if this is the case, we will see a decline in Spain’s risk premium during 2012.

At BBVA we have a very resilient business model: despite the crisis affecting the sector, we are still investing and generating profits. This is giving us a great advantage because, when the environment begins to return to normality, we will already be ahead of the curve.

Many of our competitors are focused on meeting capital requirements or resolving liquidity issues and are immersed in cost-cutting initiatives. In Spain, we did that three or four years ago, which gives us a unique opportunity to increase our share of the market over the next few years.

We are currently at a very positive juncture. In relative terms, BBVA is stronger than ever; our people perceive this and a strong sense of pride is spreading throughout the bank. Although difficulties always exist, I think we are justified in saying that we have a treasure and we want to transform it into value.

This crisis we’re talking about, to what extent has it changed BBVA’s strategy. Have you taken specific measures as a consequence of the present circumstances?

We haven’t changed strategy. The strategy is very clear and we’ve stuck to it throughout the crisis: keep working on our priority of evolving to the banking model of the 21st century. And it’s worked for us very well. For several years now we have been building new technology platforms, working on new processes and adapting management capabilities in order to present customers with an up-to-date, 21st-century banking model that combines the physical and the virtual worlds.

We have a very powerful technology drive and, with the rules of play set to change in the near future, we are now in a differential position. It will no longer be necessary to have a large physical network in order to enter a market; new models, for example, allow different kinds of players to have a very strong virtual presence.

As regards to Latin America, it is doing very well.

In the markets we have entered more recently, such as the United States, we continue to work on implementing our universal banking model. We know that the United States has a much more product-based model and we are strengthening our position there with an eye on the future.

We entered Turkey a year ago and we have an excellent working relationship with our partners and the option to increase our holding in the future. As for Asia, we have our agreement with Citic for retail banking, and we continue to invest in the wholesale business. Asia is a region in which we will seek new ways to do more. It is a huge market that will continue to grow over the next 10, 15, 20 years.

In Asia, for example, you have the alliance with Citic. How does this sort of alliance, which is a novelty for Spain, work in practice?

It is not easy. In China, we have a 15% stake in Citic, and we are working with them to provide modern banking services. At the same time we are developing very interesting lines of business with them in auto finance and private banking; here we play a more active management role.

China has 1.3 billion inhabitants, an enormous potential and a market model that must be approached with a very long-term view.

In the financial industry, innovation and technology are now crucial. To what extent has the bank’s view changed on the role innovation and technology will have in the future?

We have no doubt about the importance of innovation. We defined our innovation framework 10 years ago and we now have multiple teams working in our innovation hubs in Madrid, Mexico, Silicon Valley and Houston. And we’re considering setting up others in two more countries.

I am a member of the Committee we set up to promote the bank’s innovation. We meet every six weeks and it is incredible to see how things are developing. We are witnessing a genuine revolution and at BBVA we want to take the lead.

Our future competitors will not be traditional banks but large technology companies. Over the next five years we will see a radical change, not so much in terms of cash flow and customers, but in the valuation of winning institutions. This has occurred in many other sectors and now it’s banking’s turn and BBVA will emerge as a winner.

In the context of innovation, one advantage is international expansion, because good ideas and good practice are not limited by territory. Turkey is an example of very advanced banking. What experience does BBVA have of this kind of diversification? What examples has it adopted from other countries in order to improve its own innovation?

Turkey is one of the markets where we are still learning in terms of conventional banking. We have to admit this: today Garánti is the most advanced bank in the world in payment systems.

On the subject of innovation, which is crucial to the sector and in which BBVA is a leader, what is more important, creating more innovation or better innovation? Or is the speed at which you get that innovation to market?

It is important to balance the short term with the long term. At BBVA, innovation involves a vision that goes from 2012 to 2020. To give an example, in the short term we have set in motion “BBVA contigo” (BBVA with you), a virtual banking experiment, on which thousands of people are now working. With this programme, customers with a certain level of disposable income will be assigned one or two personal consultants to provide them with a 24-hour service, wherever they are in the world. This kind of formula has amazing results precisely because people’s perception of its quality is equally high. It has already allowed us to multiply our productivity by a factor of two. In Spain we expect it to sign up 1 million customers in the next three years.

Speaking of innovation, to what extent are regulators in some countries more of an obstacle to getting this model off the ground than a help?

In general, regulators are not an obstacle to moving from a physical banking model to a physical and virtual banking model; nor from a product-based banking model to a customer banking model. Our customer approach is based on the same three pillars as our existing strategy: principles, people and innovation. BBVA is perceived as a bank that has sound principles, both from a governance standpoint and in terms of its relations with customers.

What is true is that the role of the regulator, especially in the United States, has evolved significantly. There, although the roll-out of the Dodd-Frank Act penalises the generation of income, our banking model adapts very well to the spirit of the new legislation: to protect the consumer. It is based on making money on loans and services that offer benefits for the customer. As things stand, I see no problem here.

To what extent is a talent strategy important? How does one set about implementing it?

The idea that banks need only conventional people no longer holds true. If we really want to compete in the future, we need to update the qualifications of our people and that’s where talent comes in. To fulfil the global ambitions of a brand such as BBVA, that aims to lead banking in the 21st century, talent is a must.

According to AON-Hewitt Fortune, we are the leading European bank and rank number 12 worldwide in terms of talent and leadership management. At BBVA promotion is based on professional merit, attitude and aptitude, and we have put in place the tools that guarantee that. We have the means to identify the best possible candidates for a given position from among the 110,000 people that work for the group. Here, the best people get the best jobs. This is very important. Training is also critical for us and we have just opened the BBVA Campus, a world class training centre.

What or who would be your benchmark? What companies do you at the BBVA keep an eye on in other sectors?

Our benchmark is not only the banking sector but, above all, the world’s strongest companies. As I said earlier, our competitors in the next five to ten years will be the world’s leading technology companies.

All our management and staff know full well that we are onto something big and that in the future we may no longer be called a bank. Nowadays, some companies provide information, others credit but, at the end of the day, the borders will become blurred and all of us will be competing for customers. So, getting a client and transforming information into knowledge is where the battle will be fought.

Is there any shorthand expression that captures not only the skills required in the future but also the behaviour, the conduct of those professionals?

The most important skill will be the readiness to accept change.  Obviously there are still processes and jobs where it won’t be so necessary but our two thousand managers will certainly need it. Our managers must be prepared to face changes, have an open, innovative attitude and must be prepared to keep learning continuously, every single day.

We have an initiative underway called “BBVA Insight”, where we can read everything relevant that’s published worldwide; it is important because you have to be on a constant learning curve. I devote at least an hour a day to reading the most thoughtful pieces in the world press.

There used to be plenty of time to take changes on board. Now, everything moves very fast. Thanks to globalisation and technology what used to take years now takes weeks.

These revolutions are not always obvious but, suddenly, when you least expect it, a value proposal can leave a lot of players out of the market. At BBVA we have understood very well the change and now we are precisely gauging its speed.

In the case of BBVA, how are you looking at the issues, the expectations, the needs and the habits of the young people now starting to work for the bank?  How will you get them to participate in this radically new full-on strategy?

New employees do not have to make a great effort in order to understand new technologies or the changes they represent. The younger generation has grown up with both concepts.

Ten, maybe five years ago what’s happening now was simply not on the radar screen. Around a year ago, something very significant and tangible occurred that is accelerating our understanding of change. It was the concept of tablets and smartphones and all they enable you to do. This is helping people to realise the speed at which change is taking place and the direction it is moving in.

We’re working on a business model in which we have managers, specialists and sales people. All of the other positions are being undertaken by technology. New entrants at the bank increasingly reflect one of these three profiles of managers, specialists or sales people. They add greater value and require talent and specific skills. Hardware and software are increasingly used to perform lower value tasks.

Our business model places particular importance on training our staff in the roles they will have to play. For example, someone sitting in an office today has a very different role from the one he or she had five years ago. This will involve a progressive change for the whole of our workforce.

 How are you using new communication platforms within the bank?

At BBVA our 2,000 managers already work on their tablets, and the trend is spreading. At management committee meetings there’s no paper, we all work on line. Now we’re moving on to the cloud, where our interaction with all our people changes completely. At a global level our procedures are fully interactive. In BBVA we’re also experimenting with avatars for specific parts of jobs, including servicing customers. Imagine what that will be like.

The bank is doing much on the training front – with its own campus and its advanced differentiation initiatives – and it’s also creating a sense of pride in belonging. To what extent is it cooperating with other entities, universities or public bodies?

Both on innovation and training we have been working with various institutions and major universities throughout the world for the last four or five years. All our managers have been taking and continue to take the made-to-measure training programmes that they design for us based on their experience. What we see and like at universities and business schools we bring in-house.

I also believe we’re leading the field in terms of training and this is a strategic factor, particularly at a time of radical change such as the one we are currently experiencing.