Carlos Torres Vila: "Private investment will be fundamental to the decarbonization of the planet”

This Monday, Carlos Torres Vila opened the 39th APIE Seminar in Santander, together with Nadia Calviño, the first Vice President of the Spanish government and Minister of Economic Affairs and Digital Transformation. The BBVA Chair said that “private investment will be fundamental to the decarbonization of the planet.” In this regard, he believes authorities play a crucial role in building “confidence, with certainty regarding the regulatory framework, the rules of the game, budgetary and fiscal stability, and competitiveness.”

He also called for an agenda of priorities and major objectives, which are to be transferred to the regulatory framework and to public tenders. “This is essential to producing signs of demand for products and services without emissions,” he said. He then stressed the importance of authorities in terms of price setting through two elements: on the one hand, the creation of a liquid and effective global emissions market; and on the other, the elimination of subsidies that currently exist for emitting technologies, or even, explicit support for this transition through regulation or guarantees.

In the energy field, he underlined that the decarbonization objectives set in Europe have to be accompanied by effective measures so they can become a reality”. On this matter, Carlos Torres Vila said that “Spain has taken many steps in the right direction; we need to continue along this path and ensure that they work in practice”. To achieve this, the country has advantages such as ample renewable energy sources, institutions committed to this challenge, ambitious objectives, a pioneering business sector that is a leader in the sustainable transition, and enormous human capital.

In his opinion, decarbonization and energy autonomy must be approached with ambition and realism. However, initially, it will be necessary to “place special emphasis on energy efficiency measures to reduce consumption”. “Individually they are small gestures, but all of them together will play a decisive role in the planet's decarbonization”, he assured. In order for it to be “a fair transition”, he asked for “support for the most affected and vulnerable groups with specific and targeted measures.”

The BBVA Chair stressed that “the role of banks, financing said investments, will be extremely relevant. At BBVA we are totally committed to financing this transition.”

The role of public institutions, key to promoting innovation

Secondly, he referred to digitization and new technologies as levers of economic growth. “Digitization represents an enormous competitive advantage,” Carlos Torres Vila stressed, but at the same time he indicated that “we must take special care to ensure that its undeniable benefits reach everyone.” “At BBVA we have launched initiatives to facilitate the adaptation of the elderly or people with special needs, and we will continue to work” along these lines.

Going beyond digitalization, he said that “we are facing an unprecedented wave of disruption”. Technologies such as artificial intelligence, cloud computing, blockchain technology, the internet of things, robotics and gene editing “are transforming the economy and will have a major impact on all industries”. The BBVA Chair expects these activities, which are currently in their infancy, “to multiply their value in little more than a decade, replacing traditional activities in the process”.

On this point, he emphasized the role of public institutions in two areas. First, fostering innovation, with measures such as the recent approval of the project for the recovery and economic transformation of microelectronics and semiconductors, or the plan to attract scientific and innovative talent. Second, investing in education, much needed in this changing environment.

“At BBVA we want to be part of this transformation, we support education y and knowledge and we accompany our clients so they can take advantage of the opportunities brought by all this innovation,” he said. In this way, and aiming to be the bank of the companies that are redefining the future, BBVA has reorganized internally to capitalize on this opportunity,” he said. Likewise, “we have increased our desire to invest in growth companies,” he added.

Finally, the BBVA Chair referred to the disruptive potential of decentralized technologies in both the general economy and finance. “The financial sector is the first to apply this type of technology, but decentralization through ‘smart contracts’ stored in the blockchain is going to extend to practically any industry,” he anticipated.

ECB actions are key to avoid a price spiral

Carlos Torres Vila also referred to the immediate effects the invasion of Ukraine has had on the economy, which has altered the road to recovery with which the year began and is causing difficulties in production chains and a rise in the cost of energy. This has led to high levels of inflation, which in Spain already exceeds 8.5 percent. In this sense, the BBVA Chair expects inflation in Spain to “gradually reduce throughout the year and normalize in 2023.”

Against this backdrop, “measures by central banks and the ECB in particular in the coming months, and everyone’s effort, will be crucial to avoid a price spiral and other factors that would impede the proper transfer of monetary policy.” Despite the uncertainty, he foresees that the Spanish economy “will continue to grow in 2022 and recover pre-COVID levels in 2023.”

In his opinion, Spain has factors in favor of its economy, such as the European Next Generation EU funds, “if they are channeled in an agile and competitive way.” In the opinion of Carlos Torres Vila, “these funds should be used to implement structural reforms and support Spanish businesses in the transition of their businesses towards more sustainable models and in their digital transformation.”

Garanti BBVA renews syndicated loan with a new focus on social criteria

Garanti BBVA recently renewed its syndicated loan with international markets. The agreement was signed with 30 banks from 16 countries for $594 million, and consists of two separate tranches of $283.5 million and €290.5 million, respectively, and a one year maturity.

Two years ago, Garanti BBVA launched the world’s first syndicated loan based on environmental, social and governance (ESG) criteria. It is continuing its pioneering sustainable finance practices, renewing this loan that is now indexed to social criteria. The loan will be used to finance foreign trade activities and for general corporate purposes.

The interest rate currently stands at SOFR + 2.75 percent and Euribor + 2.10 percent, respectively. The deal received a total of $743 million request which is equalled 125 percent. As part of the loan agreement, an international audit company will determine whether Garanti BBVA has successfully managed to meet a series of social targets. If it does, the interest rates will be lowered. The targets include the amount of financing provided to companies led by women, to micro-SMEs, and being included in the Bloomberg Gender Equality Index..

Garanti BBVA CEO Recep Baştuğ stressed how important sustainable finance is to the bank: "We continue to lead the development of the sustainable financial market. For more than 16 years, we have been turning words into action, and setting an example for the sector. In this sense, we are happy to renew the syndicated loan related to sustainability, this time with a focus on social criteria.”

The renewal of the syndicated loan also underlines Garanti BBVA's power to create sustainable funding in the overseas financing market. “Our bank has once again proven its leading position in the sector, with its strong correspondent banking network, experienced team and success in job creation," Recep Bastug noted.

BBVA channeled 35.4 billion euros in sustainable financing in 2021, up 72%

BBVA has accelerated the volume of financing for sustainability-related projects, both for climate action and those that contribute to inclusive economic growth In 2021, the bank channeled 35.4 billion euros in sustainable finance, up 72% from 2020, and totaling 86 billion since announcing its sustainable finance commitment in 2018 This amount is 43% of the announced total target: 200 billion euros for the 2018-2025 period.

In the last year, BBVA has accelerated its 2025 Commitment to sustainable financing, thanks to the reinforcement of the product offering in the wholesale and retail segments. Whereas in 2020 the increase compared to 2019 was 13%, in 2021 the year-on-year growth was 72%.

“The acceleration in sustainable finance reaffirms our sustainability strategy. Climate change and the process of energy transition and decarbonization is the biggest business opportunity for banking over the next ten years. Such a large-scale transformation requires capital investments amounting to around 5% of annual global GDP. A key part of BBVA's strategy is to help its customers adapt to this new environment, not only by financing, but also by advising them in this transition,” said Javier Rodríguez Soler, BBVA's Global Head of Sustainability.

The 86 billion euros of sustainable origination between 2018 and 2021 has been allocated to the two pillars that guide BBVA's commitment and mission in sustainability: 80% to climate action and 20% to inclusive growth.

BBVA incorporates climate change risks and opportunities into its investment and financing decisions. The bank promotes sustainability in each of its operations and products. It currently has a catalog of sustainable alternatives for all its products in Spain and will continue along this path in the rest of the geographical areas in which it operates. BBVA has made the carbon footprint calculator, already developed for companies in 2020, available to private digital customers in Spain.

BBVA - alongside South Korea's KB Financial Group - obtained the highest score in its sector in the Dow Jones Sustainability Index (DJSI), making it the most sustainable bank in the world, according to this index. This is the first time that BBVA has reached the highest position in this international benchmark ranking, after holding second place in the last two years.

BBVA's ‘Pledge 2025’ is based on three lines of action: financing to help curb climate change and promote inclusive growth that leaves no one behind, by channeling 200 billion euros between 2018 and 2025; integrating environmental and social risks associated with the bank's activity to minimize potential direct and indirect negative impacts; and involving all stakeholders to collectively promote the financial sector's contribution to sustainable development.

Fuente: bbva