What will change in Kutxa from 24 October?

The truth is that very few things. Instead of there being an assembly of 80 people, there will be a board of 15 people. This is the only fundamental change. So far these people have been proposed by the Provincial Council of Gipuzkoa, the City Hall of Donostia-San Sebastián, the General Boards, the workers and the clients, and from now on the customers will not be able to make any proposal because Kutxa has no customers, the clients are from Kutxabank. The conditions that are required to be employers also change, they are much harder than before. On the one hand, a professional resume and experience will be required, and on the other hand, there are incompatibilities: politicians cannot be in the board, nor can public offices.

But nature is maintained, private and social, the objectives are the same, the decision-making mechanism is also … On the other hand, we have shortened the extension of the posts, before there could be three mandates, now up to two. And public control will be done by the Basque Government and the Bank of Spain.

How will Kutxa maintain public and social control if the main decision point is in the hands of 15 employers?

Now there are also, now there are fifteen people on the board of directors and 80 on the assembly.

But from now on the board will have the capacity to appoint these employers…

No, the General Boards. They will be proposed every four years.

Propose it, but designate it?

The proposed ones are designated.

Let us suppose that in the forthcoming foreign elections the political colour of the General Meetings is turned. Can representation of the employer be guaranteed?

Yes, that is what the statutes say. The patrons will be proposed by the General Boards and will be formally approved by the patrons of the Kutxa. You can revoke them if they do not meet the criteria of incompatibility and professionalism.

So is this proposal binding, if these criteria are met, is it obliged to accept it?

Legally, we have not made it binding, because that could go against the law. The law says the employer must name them. But it is the mechanism that we have created to make the names that we have taken out of the General Meetings truthful. That is what guarantees social representation. Finally, Kutxa is the Guipuzkoan and the one that best represents Gipuzkoa are the General Boards. In the past, Gipuzkoa had to be represented in Kutxa (municipalities, clients…). But let us not fool ourselves, behind are the political parties and the unions. Everything will remain the same, there is no change.

The employer will have a protectorate, in this case it will be the Basque Government, but can it influence the strategic decisions of banking foundations? For example, can you prevent private capital from entering Kutxabank?

What the Basque Government has to do is to confirm that Kutxa complies with the law and with the stated objectives. But that is also the case now. When strategic decisions have been taken, such as the merger of the three boxes, we have needed the authorisation of the government, which, if it is legal, will obviously be given.

It is therefore the responsibility of the Basque Government to monitor compliance with the law.

Like all foundations. Foundations are highly regulated and the government must ensure that they are in line with its objectives.

Mario Fernández said savings banks will have to reduce their participation in Kutxabank to 30%. Do you think the same thing?

He gave his opinion and predicted. I'm an economist, but I haven't learned to guess the future.

But you'll have a forecast.

I think it will be difficult to maintain 100%, but surely we will not have to drop from 51%.

Who is pressing for this to be the case?

the European Central Bank, the Troika and the Bank of Spain. They put pressure on Kutxabank and the foundations. To foundations, for example, through this law [of savings banks and Spanish foundations]. The law states that foundations with more than 30 per cent stake in a bank will have to draw up a financial plan, according to the same source. This plan must be approved by the Banco de España and, if it does not accept it, it has the competence to force it to sell it. It's a form of pressure.

It also forces savings banks to transform, as they are now, into bank foundations. Is this law good for you?

This law is a condition for Europe to give money to Spain. This is one reason. The Spanish financial system needed a lot of money to capitalize on banks, and it had to ask Europe for money to lose it. It imposed a line of EUR 100 billion, on the condition that: “I don’t want to come back to find me money.” To ensure this, all Spanish banks must have solvency, and not only the banks, but also the shareholders, if next time the banks fail so that the shareholders can put money.

Is that what it puts in the memorandum signed with Europe?

You are asking me for money and I am putting conditions on you, like any bank.

Can Kutxabank end up being absorbed by a large bank?

Of course. But we don't know where it can end, it will end where we take it or where the market takes it.

Is this not ruled out in the current direction?

I don't know anybody who wants Kutxabank to end up being eaten by another bank. But for that you need a strong bank. Kutxabank's main challenge isn't whether it's going to be privatized or not, it's not those corporate accounts, the main challenge is to have a solid business, because it's a commercial bank, it's always been like the boxes since it was created.

The Management Board considered that the proposal of the Council of Gipuzkoa to convert Kutxa into an ordinary foundation "is late". Would it be feasible if such a proposal had been reached earlier?

The Representative of Gipuzkoa is not a proposal, they are two ideas: Kutxa sells its shares free of charge to the Council and the municipalities, which will return to the Fund the profits they receive from their shares. We have to work on how the shares are to be sold, how you are going to guarantee that money, how the municipalities and the Council are not going to sell the heritage, the presence of Kutxa in Kutxabank, the statutes, the board… A proposal has to be executable and actionable, all this is to be defined. What we have seen is that legally it is not viable, and it is clear that by 29 December it does not give time, by then either we are transformed or transformed.

The Council has announced that it will open a judicial process if its proposal is not discussed at the Kutxa Assembly in Vitoria-Gasteiz. It appears that the Management Board refuses to discuss.

It can be debated in the House and I am sure that this issue will come out and be debated.

But it is not on the agenda.

No, it is not on the agenda as adopted by the Management Board. There's an order and we're looking at how we can fix it, we haven't decided yet.

Has Kutxa’s management studied another alternative, besides being transformed into bank foundations? More ways have been mentioned: from the credit union, from the public bank… Has there been any other examination on the table?

Don't confuse the boxes with Kutxabank. When they say bank credit, they refer to Kutxabank. The boxes have two options: to become bank foundations or ordinary foundations. We are clear that we will comply with the law, and we have no problem with having a banking foundation. We don't see the advantages of an ordinary foundation. The problem is not whether it is a bank foundation or an ordinary foundation, the only problem here is that we have 32% of Kutxabank’s shares, and as I said before, the law does not allow us to have more than 30%. The box, if you have a problem, has 2%, very small.

And how will you fix it? For example, the PNV has asked the Council of Gipuzkoa to purchase EUR 10 million from Kutxa in Kutxabank shares.

Once it has become a banking foundation, the Bank of Spain is going to demand a financial plan, and for this it is preparing a circular, which we do not yet know. We will respond to you when we meet you.

Can that decision to become a banking foundation, if there's political will, change in the future?

Yes.

What would be the formula?

Make decisions based on what you want to convert. The only limitation is that if you have more than 10% of a bank or have the possibility to appoint a counselor in that bank, you are obliged to set up a bank foundation. Don't you want to be that? Well, you have to go down 10% and have no rights or effects on Kutxabank. Is that what we want? How does Kutxa not influence Kutxabank? No.

The results of the stress tests will be known shortly and you have stated that you are calm. What steps have you taken to have that confidence?

A stress test is a photograph. When we were three boxes we have always been at the top of the stress tests, both in Vital, in BBK and in Kutxa. Once we have met, Kutxabank continues to have the strongest balance in Spain, so we believe we will be at the top. The photo of a bank varies very little from year to year.

Kutxabank has sold some of its shares in several companies, including Kutxabank. Kutxa also had several historic buildings in Donostia-San Sebastian.

The only thing we have sold is part of this building, because the Member has asked us to do so. And we're negotiating the sale of a plant on Garibai Street. Why? Because we don't need it. As we've joined the three savings boxes, we need less buildings. And we've downloaded the shares in Euskaltel and Ibermatics. In Euskaltel we are still 50% and in Ibermatia we are the second shareholder.

What is your goal?

If you have more than 50% of a company, you have to set all your items in your accounts. We would have in our accounts the telecommunications revenue, the employees of Euskaltel, another 3,000 employees of Ibermatica… That’s why it’s important to reduce by 50%, if not the accounts are not clean.

The Basel III agreements also require industrial holdings to be reduced.

The bank is an intermediary, we take the money from savers and lend to those who need it. What Basel says is that the banks have to act on that, on savings and on investment. We cannot invest the savings in stocks, perhaps in a little soup, but not in excess. In their day the banks had an industrial portfolio that was taken off, and the boxes also go the same way.

The International Monetary Fund (IMF) has said that European banks do not yet have sufficient capacity to grant loans. What is Kutxabank in?

We are looking forward to granting credits. Another thing is that for that you need a petition and today it is very low.

But is there capacity?

Yes, ability and desire, because it's our business. But investments must be made to leave money to small and medium-sized enterprises, and businesses are not investing anything. If there is no investment or credit claim.

So what is Kutxabank's main current business line? What do you shoot from Kutxabank?

Private individuals, saving the Basques, but that is going to decline. Mortgage loans account for a third of what is sold five years ago, as homes are sold three times less.

If mortgages have fallen and credits are not granted, you have to make profits from somewhere…

We have a lot of mortgages made over the last 30 years, and of them we live, not the news we're doing. We have a balance, a base, but that's coming down, this is like a bathtub: but in the last five years we've been going more through the hole than through the source. The GDP balance for Historical Territories is declining by 3-4% each year. The future of Kutxabank will be guaranteed if we manage to have the full bathtub.

And to cope with this downturn, what's the way?

The economy has to recover. Then there will be investments, companies, people will buy houses with a salary, the economy will rise, and so we will give credits. The financial sector is the other side of the real economy, the other side of the same coin. But the financial sector can't move the real economy, that's what people are doing.

It is precisely the financing of the real economy of the Basque country that has been one of the main functions of the savings banks. But at Kutxabank, the investment fund management business has grown the most in the last year.

The most important part of the box business is private and has always been so. Until 30 years ago, they were prohibited from working with companies, since their creation, and for the first 100 years they only worked with private individuals, with deposits and loans, especially mortgages, and with money. In the last 30 years we have entered the business world, but it has been a small part, it has been between 15% and 20% of our balance sheet and it follows.

Kutxabank decided to sell to a "speculative fund" the debt of EUR 340 million that citizens could not pay. They've also done the IRPH rates, the evictions are there... Can they mistrust citizens about the direction Kutxabank is taking?

In our business the goal is to collect the savings and leave them to those who need it and charge them to those who leave it when it suits them. You have to try, it's your obligation, because it's not your money, it's somebody else's money. We do that management and in the end, because we don't have the ability to collect the leftovers, there are specialized companies that work as a collector of frac: they take the leftovers from the banks and they charge. That has been done now and always, it is not something new.

Could that have been made clearer by the crisis?

Now everybody looks at banks and everything we do is being looked at as something new, but this has always been done. You negotiate if someone hasn't paid the house and if you don't reach an agreement, you're staying with the house. The business of banks has always been and will be so, as the business of the police is to put fines and the business of the treasury is to collect taxes.

The leader of the PAH, Ada Colau, said that Kutxabank is the most ruthless entity in the Spanish state.

I think it is quite the opposite. We reached an agreement with 99% of those who do not pay. And that's a fact. We are boxes, we have always had a special sensitivity and so do we have it in Kutxabank, because it is the same people. Only in the last moment, and because there is no choice, we have to stay with the house. But it's not our will, nor is it our desire.